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Dell Buys EMC For $67 Billion In The Biggest Tech Merger Ever

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So it is official now. Dell has bought data storage enterprise EMC for a whopping $67 billion ($33.15 a share) thereby exceeding the expectations which had estimated the deal to be in $50-$60 billion range.

This is also the biggest tech merger ever, surpassing the $37 billion deal between Avago technologies and Broadcom Corporation which took place in May this year. What makes this even more interesting is the fact that Dell, with a valuation of around $25 billion in itself is a smaller company than EMC which is almost worth $50 billion.

Under the deal, EMC and Dell will become the combined private company and VMware will continue being a publicly listed company. According to a statement released by EMC, the two combined companies will make the Dell and EMC the the world’s largest privately-controlled, integrated technology company. Dell plans to fund this deal by a  combination of new common equity from Chief Executive Michael Dell, Silver Lake and others, the issuance of tracking stock, new debt financing and cash on hand.

Dell said the combined company “will focus on rapidly de-levering” in the first 18 to 24 months after the deal closes, which it expects to happen between May and October of 2016. Until the transaction closes, long time CEO Joe Tucci will be the chairman and CEO of EMC and after the deal is completed, Tucci will retire and Michael Dell will take over as the chairman and CEO of the combined company.

This deal which is deemed quite risky by many, paves way for Dell to compete with the likes of IBM, HP and other vendors in the area of private cloud computing and storage.

Moreover with the declining PC market and the emergence of popular cloud based services such Amazon Web Services, it becomes even more crucial for the third largest PC manufacturer to diversify its business from a consumer centric one into becoming a technology provider for bigger enterprises in data storage and management.


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