PC manufacturer Dell is forking out $US65 billion to buy technology conglomerate EMC in one of the biggest tech merger deals ever. Here’s what you need to know.
Image by Isriya Paireepairit under Creative Commons licence
In 2013, Dell founder Michael Dell along with private-equity firm Silver Lake partners joined forces to take the company private so that he could have more control over its direction and to avoid the pressure that comes from demands to deliver results to shareholders on a quarterly basis.
The vendor has copped a beating in recent years with a continuous slump in global PC shipment sales and it knows it needs to diversify in order to remain relevant in the technology space.
Meanwhile, EMC has been dabbling in a variety of technology segments that stray from its own data storage heritage. It is a majority owner of virtualisation giant VMware and cloud computing software provider Pivotal. It acquired security vendor RSA in 2006 and most recently bought converged infrastructure specialists VCE from Cisco. These are just some of the companies EMC is involved in.
Buying EMC makes sense for Dell in terms of broadening its capabilities across different technology categories, at least on paper. The two companies have a few cross-overs in terms of what’s in their product portfolios (such as servers) and there’s no word on how they will integrate with each other just yet.
The EMC board of directors has approved the merger and will recommend approval by shareholders, which is no surprise given the company has been going through some rough times as well. It recently announced plans to lay off staff as part of a commitment to cut $US850 million in expenses.
Michael Dell is set to be the chairman and CEO of the newly-combined company. EMC CEO Joe Tucci will remain in his EMC position until the transaction is finalised, which is expected between May and October next year.
But it’s not all set in stone just yet. A merger of this magnitude will still have to gain antitrust approval and there are still quite a few details to nut out. We’ll provide updates on this deal as they come through.