What makes this deal even more interesting though, is that Dell with a valuation of around $25 billion was by far the smaller fish at approximately half the size of EMC.
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Its takeover of EMC will complete Dell’s transition from a consumer oriented firm known mainly for its ubiquitous desktop PCs to one providing storage solutions and technology for large companies. Shareholders at EMC will get around $33.15 per share, which includes $24.05 per share in cash and tracking stock-valued at $9 per share-at VMware, the company’s popular cloud and virtualization subsidiary.
In a press release Monday, Dell noted that the acquisition of Massachusetts-based EMC “will create the world’s largest privately-controlled integrated technology company”.
Joe Tucci, EMC’s chairman and chief executive inserted a clause in the deal in anticipation of a revolt by Elliott which would allow rival bidders to try to top Dell’s bid over a 60-day “go shop” period.
Dell’s headquarters will remain in Round Rock, Texas, just outside of Austin, and the headquarters of the combined enterprise systems business will be located in Hopkinton, Mass.
EMC’s board has approved the merger and will recommend that shareholders do so as well.
While the two companies overlap somewhat in their customers, Dell sells mainly to the low to middle of the market and EMC to the middle to the high end, said Patrick Moorhead of Moor Insights and Strategy.
Dell has continued their transformation as a company with their purchase of EMC, the data storage company. EMC and Dell are in complementary segments of the computer industry and if all goes well the two companies might be more valuable together than apart.
If it was about on-premise software and hardware, this merger would be a “juggernaut super combination”, but since much of the future load will run in the cloud, the new Dell has to find a path beyond serving as an original equipment manufacturer for public clouds, he said.
That means EMC, which owns around 80 percent of VMware, would no longer be able to control how many VMware shares are traded on the open market, which could lead to greater swings in response to market shifts.
This is no surprise, and as we reported earlier a deal was expected to be finalised before the day was out, although previous speculation had pinned a slightly lesser price tag on EMC – namely $53 billion (£34 billion).
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“We are doubling down and increasing our investment in this differentiated market leader for the next paradigm of enterprise computing”, Durban says.
