Wheelings & Dealings: Dell Makes Ambitious Bid to Acquire EMC

By Joe Rizzo October 12, 2015

Dell, once only a provider of PCs, has acquired EMC Corp. in a landmark deal.

Many lifetimes ago, when I was setting up offices and maintaining computer systems, my device of choice was Dell. They made a vanilla device that accepted various cards, which made it the perfect machine to set up in different departments, each of which had different needs.

However, a company like Dell can no longer remain in existence by simply making and selling PCs. It is with this in mind that Michael S. Dell successfully took the company private two years ago. Since then, Dell has been acquiring companies to strengthen its portfolio.

EMC has agreed to be acquired by Dell and partners in a deal that involves cash and a stock deal valued at $67 billion. It is said that this is the biggest acquisition ever with respect to the U.S. tech space, with the buyers paying $33.15 per EMC share.

However, it appears that the transaction is a lot more complicated. While the actual cash value has not yet been disclosed, the transaction involves a special kind of stock. That price is about 27 percent higher from where EMC’s shares were trading before news of the deal first emerged. In addition, Dell would also be acquiring a huge amount of EMC debt.

Image via Shutterstock

According to Pund-IT analyst Charles King, the acquisition of EMC gives Dell a stronger claim to being the only IT vendor with a full set of products from the PC to the data center. That’s a valuable position to hold in the market; if a vendor can buy all the necessary components for a full range of products from one location, they can generally get better deals and increase brand awareness/trust.

Buying EMC would position Dell in the data storage industry, adding to existing offerings like network servers, corporate software and mobile devices. The deal will combine the world's biggest enterprise storage vendor with one of the largest server makers. This combination will form a company capable of serving a much wider range of enterprise needs.

Michael Dell commented, “We’re continuing to evolve the company into the most relevant areas where I.T. is moving. This deal just accelerates that.” Both Dell and EMC’s CEO, Joe Tucci, believe that keeping the merged company’s one-stop-shop business model will help to draw corporate customers who are anxious to buy servers.

In 2004 EMC acquired VMware, which it then spun off, though it retains 83 percent of its shares. While Dell will now own a majority stake in the publicly traded VMware, Dell’s owners adamantly insisted that their company will remain privately held for some time. Dell feels that remaining private gives the company a tremendous amount of flexibility.

Edited by Kyle Piscioniere

Contributing Writer

Related Articles

Bloomberg BETA: Models Are Key to Machine Intelligence

By: Paula Bernier    4/19/2018

James Cham, partner at seed fund Bloomberg BETA, was at Cisco Collaboration Summit today talking about the importance of models to the future of machi…

Read More

Get Smart About Influencer Attribution in a Blockchain World

By: Maurice Nagle    4/16/2018

The retail value chain is in for a blockchain-enabled overhaul, with smarter relationships, delivering enhanced transparency across an environment of …

Read More

Facebook Flip-Flopping on GDPR

By: Maurice Nagle    4/12/2018

With GDPR on the horizon, Zuckerberg in Congress testifying and Facebook users questioning loyalty, change is coming. What that change will look like,…

Read More

The Next Phase of Flash Storage and the Mid-Sized Business

By: Joanna Fanuko    4/11/2018

Organizations amass profuse amounts of data these days, ranging from website traffic metrics to online customer surveys. Collectively, AI, IoT and eve…

Read More

Satellite Imaging - Petabytes of Developer, Business Opportunities

By: Doug Mohney    4/11/2018

Hollywood has programmed society into believing satellite imaging as a magic, all-seeing tool, but the real trick is in analysis. Numerous firms are f…

Read More