It is meant to give Dell a way into more lucrative and faster-moving markets than the now declining personal computer business.
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Elliott Management, the activist investor that acquired approximately two percent of EMC, had been pressuring EMC to loosen its grip on VMware (EMC owns more than 80 percent of the virtualization giant) on the grounds it was stifling its growth.
Daniel Ives, an analyst at FBR & Co., called the Dell-EMC merger “a landmark deal that will have wide-reaching ramifications across the tech landscape for years to come”. Dell estimates that, all told, EMC stockholders will get $33.15 per share. In this deal, Dell is the smaller fish at a $25 billion valuation.
The deal will be financed with the help of private equity firm Silver Lake. It was the largest leveraged buyout in 2013 and the largest since the start of the Great Recession in 2008, USA Today reports.
Dell, started by Michael Dell in 1984 when he was just a teenager, went on to change the PC business with low costs, customized orders and direct sales first over the phone and later the Internet.
Joe Tucci will remain CEO of EMC until the deal closes, expected between May and October 2016. However, the “go-shop” procedure is unlikely to result in any of the other firms expressing an interest and it is thought that Dell’s buy-out will be a success, subject to regulatory approval.
The acquisition comes amid a wave of consolidation among older tech companies as once high-growth groups have been forced to face the realities of a maturing industry, says the Financial Times. It will also position it to be a player in software-defined data centers, cloud architecture, infrastructure, mobile and security, making it a potential IoT MacGuffin, if it plays its card right.
Dell Inc., the world’s third-largest computer maker, said Tuesday at its annual enterprise forum in Taiwan that its acquisition of data storage company EMC Corp. will be complementary in terms of products and market strategy.
The stock market responded positively to this news. EMC rival Pure Storage Inc.
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“EMC has been an anchor of the Massachusetts technology economy for decades, and the administration is optimistic that the newly combined Dell-EMC enterprise systems unit will have a robust presence locally for years to come”, Baker added.
