dell-closes-60-billion-merger-with-emc-wsj
Dell Inc. Wednesday completed its $60 billion deal to acquire EMC Corp., the largest technology merger in history.
The new company, to be named Dell Technologies, aims to be a one-stop shop for information technology sold to business.
The company employs about 140,000 people globally and will maintain operations in Hopkinton, Mass., where EMC was located. With $74 billion in revenue, Dell Technologies will be the world’s largest privately controlled tech company.
“With the supply chain that we have and the go-to-market strength and the scale, we feel very well positioned both in the new areas of technology and in the existing areas of technology today,” said Dell Technologies CEO Michael Dell.
As the corporate computing market shifts to newer technologies and cloud services, Mr. Dell said he anticipates consolidation in the market for conventional servers and storage hardware. “We know how to win in consolidation,” he said, adding, “we’ve proven that and we’re going to prove it again.”
The deal, announced Oct. 12, took nearly 11 months to complete. Dell and its partner investment firm Silver Lake raised more than $40 billion in debt. The company also brought in more than $5 billion through agreements to sell its IT-services business and software divisions.
The merger was extraordinarily complex. Dell, which is privately held, purchased not only EMC but its Byzantine federation of wholly and partially owned subsidiaries.
Those include cybersecurity firm RSA Security LLC, software-development company Pivotal Software Inc., cloud-software company Virtustream and virtualization software vendor VMware, which will remain public.
VMware Wednesday said that Mr. Dell had been elected to the board of directors as chairman. In addition, Egon Durban was also elected to the board of directors. Joseph Tucci, VMware’s chairman since 2007, and John R. Egan resigned from the board.
The deal gives current EMC shareholders a tracking stock for VMware shares. Consequently, the privately held Dell has again begun to file quarterly financial reports to the U.S. Securities and Exchange Commission. The company had already filed quarterly reports to qualified debt investors.
Still, Mr. Dell said that away from the pressures of Wall Street to deliver quarterly earnings improvements, the new Dell Technologies will have the freedom to invest in newer technologies such as the Internet of Things, the evolution of cloud computing, cybersecurity and predictive analytics. “Those are all attractive areas for us to invest in,” he said.
Round Rock, Texas-based Dell on Tuesday reported that its revenue for the three-month period ending July 29 increased to $13.05 billion from $12.98 billion a year earlier. Overall, Dell narrowed its losses from continuing operations to $264 million, compared with a year-earlier loss from continuing operations of $292 million.
The merger between Dell and EMC is a response to overall declining markets in both Dell’s and EMC’s core businesses as technology shifts to mobile devices and toward lower-margin hardware such as servers and storage used in cloud computing.
PC shipments fell 9.8% in 2013, 10.4% in 2015 and are expected to drop another 7.3% this year with $161 billion in sales, according to International Data Corp. The $64 billion market for servers, storage and network hardware has been falling since 2014 and is expected to slide 1.3% annually for the next four years.
