Computer-maker Dell Inc struck a deal on Monday to buy data storage company EMC Corp for $67 billion in cash & stock with 19% premium. The acquisition, the year's third-largest in all sectors, top in technology sector.
The deal should help privately held Dell, the world's No. 3 computer maker, diversify from a stagnant consumer PC market and give it greater scale in the more profitable and faster-growing market for cloud-based data services.
The deal will be financed through a combination of new equity from Dell's owners - founder and Chief Executive Michael Dell, its investment firm MSD Partners, private equity firm Silver Lake and Singapore state-owned investor Temasek Holdings - as well as the issuance of the tracking stock, new debt and cash on hand.
Michael Dell, with the help of Silver Lake, took the PC maker private in $25 billion deal two years ago.
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. The combined company aims to be a leading enterprise player in the following markets:
- Servers and Storage fro the Enterprise Market
- Virtualization via VMware;
- Converged infrastructure (EMC owns VCE);
- Hybrid cloud and cloud computing
- And security via RSA, which is owned by EMC.
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