Dell has acquired EMC in a $67 billion deal that transforms the onetime PC maker into a $90 billion computing powerhouse with its sights set on dominating the enterprise IT market.
The deal -- the largest in the history of the IT business -- creates a new world order in the intensely competitive enterprise computing market. With the deal, Dell instantly becomes an enterprise superpower with a prominent position in nearly every key enterprise technology segment, including servers, storage, virtualization, networking, cloud computing services, security, big data and IT services.
"This is a major pendulum swing in the enterprise IT market to Dell," said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 232 on the CRN 2015 Solution Provider 500. "This makes Dell the predominant enterprise computing company for customers and partners. [Dell Founder and CEO] Michael [Dell] was determined to make Dell the enterprise computing market leader, and a merger with EMC and VMware was the quickest way to get there." Dell, Round Rock, Texas, will offer EMC shareholders $33.15 per share in a deal that includes EMC subsidiary VMware as a tracking stock that amounts to about $9 per share. The deal includes $40 billion in financing from private equity players, including private equity giant Silver Lake Management.
The acquisition comes only two years after Michael Dell, along with Silver Lake, pulled off one of the largest technology leveraged buyouts in history -- a near-$25 billion deal to take the company he founded in his college dorm room private.
Dell, a $60 billion company, is positioned as the world's second-largest server vendor with a robust storage, networking and security business. The deal adds to that $25 billion EMC's heavyweight status as the storage market leader and $6 billion EMC subsidiary VMware's position as the No. 1 virtualization software provider. It also includes a well-respected cloud computing services business ready to do battle with Amazon Web Services as a result of EMC's $1.2 billion acquisition in July of enterprise computing cloud services provider Virtustream.
EMC's federation of companies also includes RSA's enterprise security prowess and Pivotal's highly regarded big data software portfolio.
EMC and Dell both have very strong security offerings, with Dell focused on the client market and the midmarket and EMC's RSA unit focused on the enterprise.
The deal also pulls EMC out of a contentious relationship with activist investor Elliott Management, which had been demanding the conglomerate split up its so-called federation of companies in order to boost shareholder value.
EMC's share price had declined nearly 15 percent over the past year before getting a boost last week by news of the Dell takeover.
Elliott Management and EMC had been under a truce of sorts, which Elliott Management had extended through October in order to give EMC the opportunity to respond to its demands.