Former consumer hardware heavyweight Dell has acquired cloud computing, storage and security powerhouse EMC corp. in a deal that is being hailed as the biggest tech deal of all time.
On Monday morning, Dell and partners MSD Partners and Silver Lake bought the Massachusetts-based technology company for $67 billion USD, or roughly $33 per share, a number that far exceeds previous rumors of $27 per share, and dwarfs other large tech deals, such as the $37 billion deal between chipmakers Avago and Broadcom last month.
Shares of EMC jumped with growing rumors of the deal, but Dell is no longer publically traded after founder and CEO Michael Dell took the company private to the tune of $25 billion in 2013.
This deal is a major landmark on Dell’s path from consumer-grade PC business to enterprise-grade IT solutions provider. Dell has struggled to gain a foothold in the Post-PC world and has recently turned to enterprise-grade IT solutions as a business model.
“The combination of Dell and EMC creates an enterprise solutions powerhouse,” said Dell in a prepared statement. “Our new company will be exceptionally well-positioned for growth in the most strategic areas of next-generation IT.”
EMC, which built its reputation selling storage systems for data centers, has a large and diverse portfolio, ranging from the prominent security company RSA, to an 81% stake in VMware, the premier provider of virtualized software. VMware was included in the deal, but will continue to be run as a separate publicly traded company, whilst EMC will go private and become part of Dell.
EMC also owns Pivotal, a prominent cloud platform as a service (PaaS) provider featured in our Cloud Platforms Buyer’s Guide and PaaS comparison matrix. As of press time, Pivotal will remain operating as it is now under its current leadership.
According to a statement released by EMC, the two companies combined will make Dell and EMC the world’s largest privately controlled technology company.
However, According to USA Today, Dell’s acquisition of EMC will make the tandem the number-three player in enterprise technology by revenue, trailing only HP and IBM.
The big question is, with a larger, combined company be better for Dell and EMC? The deal comes as many of Dell and EMC’s largest competitors, such as Hewlett-Packard split their companies and spin off divisions to better deal with competition from smaller, more agile tech vendors.
At present, the deal is set to close in mid-2016 and is still subject to government regulatory approval. The deal also includes a provision that will allow EMC to “shop around” for other buyers, but the data storage company is reportedly unlikely to find a better price.
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