Dell is poised to offer $33 per share to buy storage market leader EMC in a deal that could come as soon as Monday, according to a report by Bloomberg.
The deal would include $40 billion in financing and account for EMC subsidiary VMware as a tracking stock, which would amount to $8 per share, said Bloomberg.
"For Dell, this is the holy grail," said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 232 on the CRN 2015 Solution Provider 500. "This creates a tremendous end-to-end organization that can sell and support customers from client devices to the highest-end data center and everything in between. This will make Dell a one-stop shop for all customers, from small-medium business to the Fortune 1000."
The deal would be a watershed moment for Dell CEO Michael Dell, who took Dell private in a $25 billion leveraged buyout two years ago. Dell, who founded the company bearing his name 31 years ago in a University of Texas dorm room, is set to run the combined company, said Bloomberg.
Several SP500 CEOs said the blockbuster deal would result in more solution providers' rushing to make a bigger bet on Dell. They said the deal is sure to have a ripple effect on both Hewlett-Packard, which is often sold as a server with EMC gear, and Cisco, which has been a key part of the EMC VMware VCE converged infrastructure partnership.
"I have to protect my turf," said the CEO for one of EMC's top partners that is planning to make a bigger bet on Dell. "I see our Dell business growing if Dell pulls this deal off. Dell is going to go aggressively after HP and Cisco partners."
The CEO for another SP500 company, who did not want to be identified, said he also sees a rush to Dell if the deal is completed. "There are going to be big opportunities for the channel with this deal," he said. "Dell and EMC both recognize the value of the channel. Dell is going to be doing some channel mapping with this deal. It will be interesting to see where they look at adding to their partner base."
The CEO said he sees similarities in the Dell and EMC cultures. "They both come from an aggressive direct sales culture," he said. "But they both have learned that you can't really succeed in the enterprise without a strong channel. The Dell culture is a strong culture that will stand up well to the EMC culture."
Cisco partners say a Dell acquisition of EMC would effectively kill once and for all Cisco's six-year participation in VCE. Furthermore, they said it could open the door for Cisco to buy a storage company. "The compute and networking in VCE (VMware-Cisco-EMC) is going to go from Cisco to Dell," said an SP500 CEO.
The CEO for another SP500 company, who did not want to be identified, said he sees Dell as one of the most stable companies in the market as a privately held company even with the challenge of integrating EMC. "Going private has allowed Dell to run the business for the right reasons rather than for Wall Street," the CEO said. "They are able to make longer-term bets without the quarter-to-quarter pressure."
Future Tech's Venero said Dell has the enterprise technology vision and muscle to pull off the EMC integration. He said Dell Enterprise Solutions Chief Commercial Officer and President Marius Haas, a former HP executive, has built a formidable team, including Chief Technology Officer Paul Perez, a highly regarded former Cisco executive, and President of Worldwide Commercial Sales Rory Read, a 30-year industry veteran who was previously CEO of Advanced Micro Devices.
"Dell has the talent, infrastructure and sales organization to pull this off," said Venero of the EMC integration. "Everything is in line for Dell to take this acquisition on and hit the ground running to drive enterprise share gains."
PUBLISHED OCT. 9, 2015