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Report: Dell Set To Buy EMC In $65 Billion Deal, Biggest Tech Merger Ever Will Include Go Shop Provision

Steven Burke

Dell is set to announce Monday that it is acquiring storage giant EMC in a more than $65 billion deal, making it the largest technology acquisition in history, according to The New York Times.

The Dell offer -- $33.15 per share -- includes the value of a tracking stock for EMC subsidiary and virtualization market leader VMware .

Fortune reported that the EMC board was meeting Sunday night and that the deal would be announced at 7 AM ET on Monday. Bloomberg was also reporting a deal would be announced on Monday.

The deal will include a "Go Shop" provision that would allow EMC to seek alternative offers and pay a breakup fee if it is able to strike a deal with another company, according to Reuters.

[Related: 25 Acquisitions That Paved The Way For Dell's Enterprise Evolution ]

The deal creates a new enterprise computing superpower with a leading position in servers, storage, virtualization and cloud services.

The deal was being negotiated directly between Dell CEO Michael Dell and EMC CEO Joe Tucci, said Re/code.

’We’re continuing to evolve the company into the most relevant areas where I.T. is moving,’ said Dell in an interview with The New York Times. ’This deal just accelerates that.’

The deal is yet another watershed moment for 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, according to a report from Bloomberg.

"Michael wants to make Dell the enterprise computing market leader, and a merger with EMC is the most effective and efficient path to that goal," said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 232 on the CRN 2015 Solution Provider 500. "Michael is the extreme entrepreneur. He wants to continue to drive and grow Dell. If there is anybody in the world that will be able to pull this acquisition off, integrate it and make it an effective solution for partners and customers, it is Michael."

Noting that EMC has included the "go shop" provision, Daniel Ives, an analyst for FBR Capital Markets & Co., in a report Sunday night said he views other suitors making a bid as "highly unlikely, although HP is a slim possibility." HP was widely reported to be in talks for a number of months to buy EMC last year, but the deal fell apart last October over the price of the deal.

Ives said he believes Dell would sell off the EMC RSA security unit and possibly the Pivotal big data software business given that the "core storage and cloud capabilities from EMC and VMware remain the underlying attractiveness of this deal, in our opinion, with many of the non-core units expected to be sold."

The deal amounts to a life line of sorts for EMC which has been under pressure from activist investor Elliott Management. The powerful hedge fund has been demanding EMC split up its so-called "federation" of companies in order to boost shareholder value.

Several SP500 CEOs said the blockbuster deal will 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 HP, 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."

The CEO for another SP500 company, who did not want to be identified, said he also sees a rush to Dell. "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."

PUBLISHED OCT. 12, 2015

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