Dell to Acquire EMC in $67 Billion Record Tech Deal

Computer maker Dell Inc. said on Monday it had agreed to buy data storage company EMC Corp. in a $67 billion record technology deal that will unite two mature companies and create an enterprise tech powerhouse.

The acquisition will help privately held Dell diversify away from a stagnant personal-computer market and give it greater scale in the faster-growing and more lucrative market for managing and storing data for enterprises.

The deal values EMC at $33.15 a share. Dell will pay $24.05 per share in cash and will also give EMC shareholders a special stock that tracks the share price in virtual software provider VMWare Inc.

EMC shares surged 3.9 percent to $29.08 in premarket trading.

EMC's board has approved the merger and will recommend that shareholders do so as well.

The merger agreement includes a 'go-shop' provision that allows EMC to solicit bids from other parties and pay a discounted breakup fee to Dell if a deal is made with another company.

While IBM Corp., Cisco Systems Inc., and Hewlett-Packard Co. could theoretically be potential suitors for EMC, which has a market capitalization of $53.6 billion, the chances of them challenging Dell with a rival offer are slim.

The deal will be financed through a combination of new equity from Dell's owners - founder and Chief Executive Michael Dell, its investment firm MSD Partners, private equity firm Silver Lake, and Singapore state-owned investor Temasek Holdings - as well as the issuance of the tracking stock, new debt and cash on hand.

VMware will remain an independent, publicly traded company. VMware shares were unchanged at $78.65.

Keywords: Data Storage, Cloud Computing, Big Data, ARC Advisory Group.