Dell to buy EMC for $67 billion in largest-ever tech merger

Posted:
in General Discussion edited October 2015
Two years after regaining control of his eponymous PC maker, Michael Dell on Monday announced plans to acquire enterprise giant EMC and combine the two firms in a $67 billion deal that will create the largest privately-owned technology company in the world.




The deal will be financed by Dell himself, MSD Partners --?his personal investment firm --?and private equity group Silver Lake, which also contributed capital toward Dell Inc.'s 2013 privatization. EMC's Board of Directors has already approved the merger, in which EMC shareholders will receive compensation totaling approximately $33.15 per EMC share.

That figure includes tracking stock tied to VMWare, a major player in the burgeoning virtualization market and a publicly-traded company controlled by EMC. VMWare will remain independent following completion of the merger.

"The combination of Dell and EMC creates an enterprise solutions powerhouse bringing our customers industry leading innovation across their entire technology environment," Michael Dell said in a release. "Our new company will be exceptionally well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile and security.

EMC is already a significant presence in the enterprise, both with its own storage systems and services and through subsidiaries that include Pivotal Software and RSA Security. The company competes with IBM in a number of areas, and the tie-up will likely put Dell in direct competition with the Apple-IBM alliance for some enterprise contracts.
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Comments

  • Reply 1 of 85
    Good for Dell. Shows you what taking your company 'private' can do... Apple could take this road as well.
  • Reply 2 of 85

    We'll see.

     

    I predict 2 + 2 = 3.

  • Reply 3 of 85
    rogifanrogifan Posts: 10,669member
    Dell basically saying the PC is dead, long live enterprise storage. Good luck trying to save the PC with your Surface Book, Microsoft.
  • Reply 4 of 85
    rogifan wrote: »
    Dell basically saying the PC is dead, long live enterprise storage. Good luck trying to save the PC with your Surface Book, Microsoft.

    It's bad enough that Dell now resells the Surface Pro to enterprise clients, same with HP.
  • Reply 5 of 85
    formosaformosa Posts: 261member
    Quote:
    Originally Posted by Rogifan View Post



    Dell basically saying the PC is dead, long live enterprise storage. Good luck trying to save the PC with your Surface Book, Microsoft.



    So does this deal benefit or hurt MS? I thought Dell was a MS vendor but also had Linux products. I don't know if EMC's enterprise solution uses MS or not.

  • Reply 6 of 85
    rogifanrogifan Posts: 10,669member
    It's bad enough that Dell now resells the Surface Pro to enterprise clients, same with HP.

    Intel reports tomorrow. IDC/Gartner guesses predict a pretty bad quarter for PC sales. It will be interesting to see what Intel reports. It's funny how when Satya Nadella took over at Microsoft he got rid of the whole "devices & services" mantra yet he seems to be doubling down on that. Perhaps Surface Book was in the pipeline before he took over but he could have killed it if he wanted. My guess is Microsoft knows companies like Dell and HP are moving more into enterprise services and they don't care about the smaller players like Acer and Asus (according to re/code the Asus chairman was none too pleased that Microsoft announced a laptop).

    Microsoft is basically saying we want to own the premium segment. Companies like Dell, HP and Lenovo can just focus on enterprise sales. What's left is the low margin cheap consumer segment and I don't see many companies surviving on that. My guess is companies like Asus and Acer won't be around much longer or will get snatched up by someone else.
  • Reply 7 of 85

    Another indication that 'old tech' is consolidating in response to the Cloud. All of these businesses (Servers, Storage, PC's, and Networking) are in decline as the emergence of competitors such as Amazon,  MS Azure, and the likes of Salesforce.com (SaaS) are on the ascendancy.

     

    Dell has been trying to diversify into Software and 'hyper-converged' infrastructure with little success against the likes of Cisco UCS. I predict that Cisco will acquire NetApp as they have/had a significant relationship with EMC.

     

    As to how this will ultimately work out for the combined Dell-EMC, I am generally a pessimist against these types of mergers...

  • Reply 8 of 85
    crowleycrowley Posts: 5,799member
    sog35 wrote: »
    No way on earth does this acquisition happen if they were still a public company.
    Yeah, because Wall Street hates mergers and acquisitions¡

    Talk about stretching the facts to fit a narrative.
  • Reply 9 of 85
    Quote:
    Originally Posted by formosa View Post

     



    So does this deal benefit or hurt MS? I thought Dell was a MS vendor but also had Linux products. I don't know if EMC's enterprise solution uses MS or not.


    It doesn't hurt MS, since EMC uses windows as virtual machines as well. EMC being a software company largely depended on PC/servers from vendors like Dell and HP, so this makes absolutely good sense to combine the force. It should remain the same beneficially with dell and ms relationship.

    Quote:

    Originally Posted by TheWhiteFalcon View Post





    It's bad enough that Dell now resells the Surface Pro to enterprise clients, same with HP.

    I don't see how it's bad for Dell to sell Surface Pro. I'm sure they get a good deal from MS and wont have to worry about making a tablet and focus on their PCs and server products. And now buying EMC they should be able to focus even more on the hardware/software infrastructure sitting in the massive data centers all over the world.

  • Reply 10 of 85
    crowleycrowley Posts: 5,799member
    sog35 wrote: »
    So are you challanging the notion that a private company has more flexability than a public one?
    As a generalization, that simple statement is probably correct, though it would obviously depend on active shareholder engagement, and the ability of the leadership to build consensus. Public companies also have the "flexibility" of all that shareholder investment, which gives them the capital to spend on such things as mergers and acquisitions. An Apple with empty coffers because they spent all their reserves plus a heavy chunk of debt on going private wouldn't be all that flexible.
  • Reply 11 of 85
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Dell kicking total ass since the went private.

    No way on earth does this acquisition happen if they were still a public company.  The shareholders would make too much of a protest worrying about the next quarters numbers instead of the long-term vision.

    Wish Apple made solid plans to go public too.  The emphasis on quarterly numbers and Wall Streets bullshit is hurting the companies long-term vision.

    For example Apple just spent over $100 billion on buying back stock.  That would have never happened if they were private.  They could use that $100 billion to make strategic acquisitions or pay a nice special dividend.  Apple should stop the buyback immediately and disclose that they are in early talks about going private.

    Another example of short-term thinking to make quarterly numbers to please Wall Street is:

    1. Starting iPhone at 16GB instead of 32GB. Yes starting at 32GB will hurt profits in the SHORT-TERM but in the long term it will solidify iPhone user base.

    2. Bringing out a half-ready Apple Watch.  Because of Wall Street pressure Apple brought out the Watch way to early.  The software was not ready for big time.  The hardware is not fast enough and the services are not build out enough.  If Apple was private they could have waiting till it was truly ready.

    3. AppleTV.  Should have had 4k and uncompressed audio. Should have hammered a TV package even if in the short-term they would make zero profit on it.  Should have made a more gamer ready remote and Ax9 chip.  Should have integrated Homekit. All these things would hurt short term profits but it would establish AppleTV as the standard in the all in one home box.  If they did this they could easily sell 50-75 million AppleTV's with TV packages. AT that point Apple could negotiate with the content providers a better deal once they have a dominate position.

    The $100 billion buyback was to appease Wall Street.  How has Wall Street rewarded Apple?  By making the stock worth LESS than when the buyback began.  Fuc Wall Street.  

    So basically what you're saying is Tim Cook's Apple is more concerned about Wall Street than delivering the best products and services for customers. Isn't that a bad omen for the company then? There's no way the company will ever go private.
  • Reply 12 of 85
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
      <li style="background:transparent;border:0px;color:rgb(0,0,0);margin-bottom:13px;padding-top:0px;vertical-align:baseline;"><em style="background:transparent;border:0px;margin:0px;padding:0px;vertical-align:baseline;">Morgan Stanley’s Katy L. Huberty has maintained an Overweight rating, while raising the price target from $155 to $162.</em>
      </li>

      <li style="background:transparent;border:0px;color:rgb(0,0,0);margin-bottom:13px;padding-top:0px;vertical-align:baseline;"><em style="background:transparent;border:0px;margin:0px;padding:0px;vertical-align:baseline;">Morgan Stanley’s surveys indicate solid market growth, along with record market share gains for Apple. Huberty also highlighted the “surprisingly” robust smartphone market demand, despite macro volatility.</em>
      </li>


    Yet, Apple stock is STILL down today.  Apple can never win as long as they are a public company.  Time for them to give Wall Street a big middle finger and go private

    Do tell how a company with a market cap of over $600B goes private.
  • Reply 13 of 85
    The company is not eponymous, Michael Dell is eponymous.
  • Reply 14 of 85
    solipsismysolipsismy Posts: 5,099member
    rogifan wrote: »
    Do tell how a company with a market cap of over $600B goes private.

    Being private or public has no bearing on your market cap. There is no artificial formula that says "you can do it your valuation is $599 billion, but at $600 billion, it's not permitted." Dell did it at s $13.65 per share which equates to a $24.4 billion valuation. PLEASE DON"T MAKE A COMMENT ABOUT APPLE'S SHARE PRICE BEING $100 MORE THAN DELL!
  • Reply 15 of 85
    rogifanrogifan Posts: 10,669member
    solipsismy wrote: »
    Being private or public has no bearing on your market cap. There is no artificial formula that says "you can do it your valuation is $599 billion, but at $600 billion, it's not permitted." Dell did it at s $13.65 per share which equates to a $24.4 billion valuation. PLEASE DON"T MAKE A COMMENT ABOUT APPLE'S SHARE PRICE BEING $100 MORE THAN DELL!

    If going private was a panacea wouldn't more companies be doing it?
  • Reply 16 of 85
    solipsismysolipsismy Posts: 5,099member
    rogifan wrote: »
    If going private was a panacea wouldn't more companies be doing it?

    Now you're changing your argument, as well as trying to imply that I think it's a good move for Apple.

    PS: You can easily google the pros and cons of public v private, as well as the pros, cons and how off going private after being public.
  • Reply 17 of 85
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Cook is trying to do both.  But unfortunately that is impossible.  I hope they get more customer oriented in the next few releases.  

    1. iPhone7 - please start at 32GB
    2. AppleTV 5 - please have 4k and uncompressed audio. And please close the deal on the TV package.
    3. AppleMusic - drop the price to $5 single user, $10 family plan.  Clean up the interface and bugs.
    4. Mac - give us a more compelling base model for the iMac, MacMini, and MacBook.  The base models are way too weak.

    That's your opinion.  In my opinion it is possible as long as the stock is extremely undervalued.

    At least you've finally come around to the ridiculousness of 16GB of entry level storage. ;)

    I don't agree that Cook is making product related decisions to appease Wall Street. If he was Apple would have released a "low cost" iPhone by now as everyone and their mother on Wall Street was/is saying Apple had/has to do it.
  • Reply 18 of 85
    rogifanrogifan Posts: 10,669member
    solipsismy wrote: »
    Now you're changing your argument, as well as trying to imply that I think it's a good move for Apple.

    PS: You can easily google the pros and cons of public v private, as well as the pros, cons and how off going private after being public.

    I'm not implying that at all.
  • Reply 19 of 85
    indyfxindyfx Posts: 319member

    This reminds me a bit of Unisys. One failing company buying other failing companies so they can buoy themselves slightly (for a time)

    It is a successful strategy for failing, now basically irrelevant, companies (as witnessed by unisys) However it never bodes well for the employees of the company they are acquiring (and that's the tragic part)

     

    Dell sucks, they always have. It just took Mikey dell opening his fat yap one to many times (kind of like Ballmer on that note, Elon Musk should pay particular attention here...) to make people open their eyes and realize that they did. Now that that cat's out of the bag dell is doomed to continue their spiral into insignificance. (just wait for the layoffs to begin at EMC inside a year)

  • Reply 20 of 85
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Going private is only good in a few situations.  One is if a public stock is grossly undervalued.  How many stocks do you see are grossly undervalued like Apple?  Very few.  I don't know any stock that is undervalued by 50% like Apple.

    I would say the likelihood of Apple going private is less than 1%. And I don't know what that solves. It's not like Apple can go into hiding or people, especially in the media, would stop caring about what they do if they went private. In the case of Dell, the company wanted to focus more on enterprise services knowing that personal computers are in decline. There's nothing sexy about enterprise tech. The media doesn't care about that. Boring. The space Apple is in isn't boring and the company would have the same high expectations whether they were public or private.
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