Sunday, December 22

Dell acquire EMC Corp for $67 billion

A record deal in technology industry Computer-maker Dell Inc buy data storage company EMC Corp for $67 billion. Dell tries to transform itself into a giant in the fast-growing market for managing and storing corporate data.

The deal will help Dell, the world’s No. 3 computer maker, diversify from a stagnant consumer PC market to faster-growing market for cloud-based data services.

dell acquire EMC
dell acquire EMC

 

That desire to reach beyond PCs – whose growth has been stopped in its tracks with the rise of mobile devices – echoes moves by Dell’s big rivals. Hewlett-Packard Co, the No. 2 PC maker, is splitting off its computer and printer unit this year to focus on the corporate data business. IBM Corp sold its PC unit a decade ago.

By combining Dell’s server businesses with EMC’s storage and virtualization assets, the new, enlarged company will have a broader range of products to challenge Cisco Systems Inc, IBM and Hewlett-Packard in the areas of cloud computing, mobility and cyber security.

“I don’t think either Dell or EMC were viable over the long run as a standalone; they really needed each other,” said Eric Johnson, dean of the Owen Graduate School of Management at Vanderbilt University. “Dell was mostly on the consumer side, which is a terrible place to be. EMC had some enterprise products, but not the complete package.”

The deal valued EMC at $33.15 a share as of the end of trading Friday. Dell will pay $24.05 per share in cash and will also give EMC shareholders a special stock that tracks the share price in VMWare Inc, the virtual software provider majority-owned by EMC.

Dell first approached EMC in October 2014 following speculation over a deal between Hewlett-Packard and EMC collapsing and Elliott attacking the company, the source said.

Michael Dell then met EMC Chief Executive Joe Tucci at the World Economic Forum Annual Meeting 2015 in Davos in January, the source added. Negotiations between Dell and EMC intensified in the last two months.

The transaction is expected to close between May and October 2016, the companies said.