EMC’s 80% stake in VMware will be transferred to Dell.
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Whitman’s first point of attack is the amount of debt that the deal incurs, noting that to pay back the combined $50bn of debt, Dell will need to cough up roughly $2.5bn a year in interest, “which will keep them from better serving their customers”.
Dell is planning to create opportunities integrating technologies to please customers, Computer World reported.
Dell’s $67-billion bid to buy storage giant EMC draws attention to a consolidating industry, where companies buy rivals in order to drive growth.
Meanwhile, Dell said, a private company can make investments without having to justify them every quarter to investors. Likewise, there would be chaos in the channel as they bring together two different programs and approaches. Dell conducted a long campaign go private, which it finally did in 2013, and EMC has defended its unusual “federation” structure against demands that it sell off a few divisions. If the Merger Agreement is terminated under certain specified circumstances, including in connection with EMC’s entry into a definitive agreement for a superior proposal, EMC must pay Parent a termination fee of $2.5 billion. The combined enterprise systems business headquarters will be in Hopkinton, Mass., where EMC is based. EMC shareholders still have to approve the deal.
“We’re creating an unbelievable powerhouse of an enterprise company”, said Dell Chairman and CEO Michael Dell. He said the same about the EMC aspects of this move. “I truly believe that the combination of EMC and Dell will prove to be a winning combination for our customers, employees, partners and shareholders”. There are no financing conditions to the closing of the transaction. Dell said that VMware will remain an independent, publicly traded company.
The Dell-EMC merger will allow the company to directly access big enterprises, thus, the deal comes at a critical time when HP is splitting their business, analyst Charles King said per Computer World. EMC CEO Joe Tucci is due to retire soon. He told us it’s all about the software-defined datacenter of the future.
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Dell, now primarily a business and consumer hardware company, is expected to expand its offerings to include more data storage equipment and storage-oriented software.
