SAN FRANCISCO — Dell and private equity firm Silver Lake plan to buy EMC for $33.15 a share for a total price tag of about $65 billion in the largest deal in technology industry history.
That’s according to TheNew York Times, which says an announcement could come as soon as Monday.
Shares of EMC rose 8% in pre-market trading.
“We’re continuing to evolve the company into the most relevant areas where (information technology) is moving,” Dell told the newspaper in an interview. “This deal just accelerates that.”
Dell is offering EMC shareholders about $24.05 a share in cash and $9.10 of a tracking stock tied to EMC’s VMware stake, the Times said. EMC bought VMware in 2004 for $625 million. EMC was left with an 80% stake in VMware when it went public.
The deal is a major coup for Michael Dell, who two years ago took the personal computer maker he founded private with financial backer Silver Lake in a $25 billion buyout. It also marks a major milestone in Dell’s march to reinvent Dell as an enterprise player focusing on storage and security. EMC has been negotiating with Dell and Silver Lake on a sale after previous talks with Hewlett-Packard collapsed.
“This creates a world-leading company,” Dell said in the Times interview.
Representatives from Dell and EMC could not be immediately reached for comment.
Picking up EMC’s storage and software businesses would make Dell the No. 3 player in enterprise technology by revenue, trailing Hewlett-Packard and IBM.
“The merger/acquisition of EMC by Dell makes a lot of strategic sense for Dell. EMC, thanks to VMWare, has positioned itself as a player in the growing cloud and big data industry, handling terabytes of clients’ data via product and service offerings,” Aija Leipon, associate professor at Cornell’s Dyson School of Applied Economics and Management, said in an email.
“An acquisition of the EMC storage business would immediately make Dell the market share leader in storage and help the company diversify away from the PC market,” Robert W. Baird & Co. analyst Jayson Noland said in a research report last week.
Forrester Research analyst Glenn O’Donnell says the combined company represents a serious competitive threat to Hewlett-Packard.
“Dell is fairly weak on storage, and EMC will help give it a full portfolio that it needs to compete with HP, Cisco, IBM, and the growing threat from Huawei,” O’Donnell said in an email.
EMC has mulled other transactions since coming under pressure from activist hedge fund Elliott Management last year. The Hopkinton, Mass., company has seen its storage business shrink. Elliot Management had urged EMC to spin off VMware and EMC was facing a possible proxy fight. EMC is scheduled to report quarterly earnings on Oct. 21.
Reuters reported Sunday that EMC has asked for a “go-shop” provision that would allow the company to solicit bids from other potential suitors and pay a breakup fee to Dell if another deal is struck.
Follow USA TODAY senior technology reporter Jessica Guynn on Twitter: @jguynn.
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