Dell to Buy EMC in Biggest Deal Ever in Technology Sector

Dell (NASDAQ:DELL) will buy data storage company EMC Corp in a deal valued at about $67 billion, the largest on record in the technology sector. The offer is $33.15 per share in cash and special stock, the companies said in a joint statement on Monday.

EMC shares were up 3.9 percent to $29.08 at one point in premarket trading. The deal will help the world’s No.3 PC maker tap into the faster-growing and lucrative market for managing and storing data for businesses amid waning demand for personal computers globally.

“The combination of Dell and EMC creates an enterprise solutions powerhouse bringing our customers industry leading innovation across their entire technology environment. 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,” said Michael Dell, who will lead the combined company as chairman and chief executive. “Our investments in R&D and innovation along with our privately-controlled structure will give us unmatched scale, strength and flexibility, deepening our relationships with customers of all sizes. I am incredibly excited to partner with the EMC, VMware, Pivotal, VCE, RSA and Virtustream teams and am personally committed to the success of our new company, our customers and partners.”

Dell said it would pay $24.05 per share in cash and the rest in a special stock that tracks the value of a portion of EMC’s economic interest in VMware, the virtualisation software company majority-owned by EMC.

“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,” said Joe Tucci, chairman and chief executive officer of EMC. “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.”

EMC is also planning to seek out other suitors, while the board has approved the merger agreement and intends to recommend that the company’s stockholders approve the deal. The deal will be financed through a combination of new equity from Michael Dell, MSD Partners, Silver Lake and Singapore state-owned investor Temasek Holdings as well as the issuance of the tracking stock, new debt and cash on hand.

“We are excited and honored to invest in the outstanding businesses built by Joe Tucci and his world-class management team. This is an extraordinary opportunity to continue and expand our partnership with the iconic technology entrepreneur Michael Dell and his talented team,” said Egon Durban, managing partner of Silver Lake. “We believe the strategic integration of EMC and Dell will generate unparalleled depth and breadth across servers, storage, virtualization and the next era of converged infrastructure, creating a global technology platform poised for sustained long term growth and innovation in the years to come. We are doubling down and increasing our investment in this differentiated market leader for the next paradigm of enterprise computing.”

VMware will remain an independent, publicly traded company. VMware shares were unchanged at $78.65.