2015-2016 really was the period for humongous tech deals. Weather it was Microsoft’s mammoth Linkedin acquisition, or the multi-billion Softbank-ARM deal, there has been some serious appropriation going all around. However, Dell has managed to reach the top of the acquisition chart by closing a $67 Billion EMC deal today.
We first came to know about Dell’s interest in EMC last fall, when the rumor mill went gaga over a mega deal that was brewing between Dell and EMC. Most disregarded the rumors as false owning to the sheer size of the acquisition however, Dell suprised everyone when in October, the company announced that yes, it was indeed acquiring EMC for $67 Billion.
Well, the deal is being closed today and the companies announced that, Dell Technologies, the name of the new combined company, will begin operating immediately following the close of the transaction.
The merger had received widespread support from EMC shareholders, with almost 98 percent of the voting EMC shareholders casting their votes in favor of the merger. In other words, shareholders that together represented almost 74 percent of EMC’s outstanding common stock, wanted the deal to close. Indeed, they had ratified the decision as early as 19th July.
However, Dell had been facing some significant regulatory hurdles that were put up by China’s Ministry of Commerce (MOFCOM). The ministry has finally relented however and has granted clearance for the companies’ proposed combination, thus paving the way for the completion of the acquisition.
Speaking on the topic, Michael Dell, chairman and CEO of Dell Technologies said,
This is an historic moment for both Dell and EMC. Combined, we will be exceptionally well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile and security. Our investments in R&D and innovation, along with our 140,000 team members around the world, will give us unmatched scale, strength and flexibility, deepening our relationships with customers of all sizes.
EMC Corporation on the other hand, is an American multinational corporation from Hopkinton, Massachusetts, United States. The portfolio of products offered by the company includes data storage, information security, virtualization, analytics, cloud computing and so on.
Speaking on the topic, Joe Tucci, chairman and chief executive officer of EMC said,
I am proud of everything we’ve built at EMC – from humble beginnings as a Boston-based startup to a global, world-class technology company with an unyielding dedication to our customers. The combination of Dell and EMC creates a new powerhouse in the industry – providing the essential technology for the next era in IT.
However, things are not going to be all that easy. The merger may conclude today, but effectively getting the two companies to work together is going to take significantly more time and effort. Why? Well, unlike most companies, EMC is more like a loosely held federation of many companies operating in a variety of niches.
Its actually quite complicated. EMC has a whole bunch of pieces and one of the largest, VMware, was initially creating problems fitting in. This had even led to a drop in EMC stock that saw it come down to almost 50 percent of its initial value. However, the shares picked back up until it arrived at almost 90 percent of its initial value — much to the relief of Dell and associated investors.
Interestingly, Dell is the smaller of the two companies and as such has had to resort to a massive $40 billion debt to finance the deal. The company may just have to sell off some of its assets in order to pay this huge debt off — in fact, it’s almost a certainty. So yes, someone looking at the whole situation from the outside may think that Dell has landed itself in a pickle.
However, the company has also significantly upgraded its portfolio in a single stroke — specially since many of the products of these two companies compliment each other. Depending upon how the company handles things post the acquisition, the deal also has the potential to prove absolutely wonderful for Dell and give it a foothold in a bunch of futuristic and upcoming markets.