Dell Inc. and EMC Corporation have signed an agreement under which Dell, together with its owners, Michael S. Dell, founder, chairman and CEO of Dell, MSD Partners and Silver Lake, will acquire EMC Corporation, while maintaining VMware as a publicly-traded company. Dell and shareholders at Silver Lake will own approximately about 70 percent of the combined company’s common equity, excluding the tracking stock.
The reason behind the deal as stated on Dell's official website, is to "Create the industry leader in high-growth areas of the $2 trillion IT market with complementary product and solutions portfolios, sales teams and R&D investment strategies." The transaction combines two technology franchises – with leadership positions in servers, storage, virtualization and PCs – and brings together strong capabilities in areas, including digital transformation, software defined data center, hybrid cloud, converged infrastructure, mobile and security.
Recode reported that according to the terms of the agreement, Dell has agreed to acquire EMC for $67 billion and the combined company will be privately held, operating outside the scrutiny of public market shareholders. Michael Dell will be Chairman and CEO of the combined company, while Joe Tucci will step down as CEO and Chairman of EMC after the transaction closes.
As a part of the deal, Dell will be partnering with EMC, VMware, Pivotal, VCE, RSA and Virtustream teams. Michael Dell, states, “Our new company will be well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software defined data center, converged infrastructure, cloud and security. Our investments in R&D and innovation along with our privately-controlled structure will give us scale, strength and flexibility deepening our relationships with customers of all sizes. ”
“I’m 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, EMC Chairman & CEO. “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.”
Dell and EMC believe that their merger will help address large and small customers’ rapidly changing critical IT needs. Dell will offer customers an end-to-end product portfolio spanning compute, networking and storage segments – both legacy and emerging – to address customers facing technology-driven disruption. To explain the thought process behind the merger, the post goes on to explain, "Digital transformation is driving disruption across all industries; transition from traditional on-premise to hybrid public/private cloud infrastructure; and need to balance agility, mobile workforces with persistent security threats."
Egon Durban, managing partner of Silver Lake, said "We are excited to invest in the businesses built by Joe Tucci and his world-class management team. We believe the strategic integration of EMC and Dell will generate 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."