EMC Corp. (EMC) to be Acquired by Dell Inc. in $67B Deal

Shares of EMC Corp. (EMC) were trading up +1.50 or +5.38 percent to $29.36 per share in Monday’s premarket after the announcement of Dell’s takeover of the company early this morning. The transaction, valued at $67 billion will be the largest deal ever in the technology sector. EMC stock closed at $27.86 per share, up +0.68 or +2.5 percent in Friday’s regular trading session.

Founded in 1979, Hopkinton, Massachusetts based EMC Corporation (EMC) started its business by supplying Prime Computer with 64 kilobyte memory boards.
The company has evolved into a major international provider of analytics, data storage, information security and cloud storage and computing. EMC is the world’s largest data storage systems provider by market share and employs over 70,000 people. The company had net income of $2.7 billion on revenue of $24.4 billion and had total assets in excess of $45.8 billion last year.

Round Rock, Texas based Dell Inc. is a privately owned computer technology company which develops, markets and supports computers and computer systems worldwide. Dell Inc. was founded by Michael Dell in 1984 as PCs Unlimited, which sold PC computers made from stock parts out of a dorm at the University of Texas. The company is now among the largest technology companies in the world, employing more than 100,000 people. The company sells PCs, network switches, servers, data storage devices and other computer peripherals.

The deal between EMC, Michael S. Dell, MSD Partners and Silver Lake will create a leading privately controlled end to end technology company and consists of a cash and special stock offer. EMC shareholders will receive $24.05 per share in cash and the rest in a tracking stock linked to VMware (VMW), which will continue as a publicly traded company.

Palo Alto, California based VMware was acquired and became a subsidiary of EMC in 2004. In 2007, EMC sold 15 percent of the company in an initial public offering, listing the stock on the New York Stock Exchange. VMware is still controlled by EMC and specializes in virtualization software and cloud services.

According to the agreement, EMC shareholders will receive approximately 0.111 shares of the new tracking stock for each share of EMC stock. As an example, for valuation purposes each share of tracking stock at $81.78 (the intraday weighted average price for VMware stock on October 7th, 2015) would give EMC shareholders a total consideration of $33.15 per each EMC share.

Joe Tucci, Chairman and Chief Executive Officer of EMC said in the release that, “I’m tremendously 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. But the waves of change we now see in our industry are unprecedented and, to navigate this change, we must create a new company for a new era. I truly believe that the combination of EMC and Dell will prove to be a winning combination for our customers, employees, partners and shareholders.”

Michael S. Dell, founder and Chief Executive of Dell noted that, “Our new company 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”.

The transaction is subject to the customary conditions including regulatory and EMC stock holder approvals. The deal is expected to close in the second or third quarter of Dell’s fiscal year which ends on February 3rd, 2017, in May through October of 2016. Shareholders of both EMC and VMware are showing their approval of the deal, with both stocks up significantly in this morning’s premarket.

Other News About EMC

Exclusive: EMC to shop itself after deal with Dell – sources

According to sources familiar with the matter, EMC has asked for a “go shop” provision in the deal with Dell.

Dell Takes 14% of Global PC Market

Company comes in third after Chinese Lenovo and Hewlett-Packard.

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Published on Oct 12, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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