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Dell-EMC Merger the Biggest in the Tech Industry

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Key highlights of Dell-EMC merger

The tech industry witnessed its biggest merger of all time on October 12, 2015, when Dell and EMC Federation (EMC) announced a merger valued at approximately $67 billion. According to a rough estimate, the deal will bring EMC’s share value to $33.15—a premium of ~28% from the price before the news of a possible deal was leaked. Dell will own approximately 70% of EMC’s common equity. The deal will earn Elliott Management, which owns a 2.2% share of EMC, a profit of about 20%, according to a Financial Times article.

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Rumor turned reality

The news of a possible merger between the two companies was leaked by unnamed sources on October 8, 2015, which saw shares rise by 4% to $27.06. In this series, we’ll explore the details and synergies of the merger, as well as the impact of the deal on the competitive tech landscape.

Dell-EMC merger a threat to big tech giants 

The combined company will deliver end-to-end technology solutions, giving tough competition to players such as Hewlett-Packard (HPQ) and IBM (IBM), who offer complete enterprise computing services. The merger will force networking giant Cisco (CSCO) to look for a storage acquisition in order to remain competitive.

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About EMC

Founded in 1979, EMC Federation provides a complete suite of enterprise solutions through independent companies.

  • EMC Information Infrastructure provides storage solutions.
  • RSA provides security solutions.
  • Pivotal provides cloud platform and agile development solutions.
  • VMware (VMW) provides virtualization solutions.
  • VCE provides converged infrastructure solutions.

EMC, headquartered in Hopkinton, Massachusetts, has a market capitalization of $53.62 billion and posted a revenue of $24.4 billion in fiscal 2014. The company employs about 70,000 people worldwide.

About Dell

Founded in 1984 by Michael Dell, Dell is a provider of computers and servers. The company went private in 2013 under a $24.9 billion buyout by Michael Dell and private-equity firm Silver Lake. Headquartered in Round Rock, Texas, the company employs more than 110,000 employees worldwide and posted revenue of $57.2 billion in fiscal 2014.

If you are bullish about VMware, you can invest in the SPDR Morgan Stanley Technology ETF (MTK), which has 2.3% exposure in the company’s stock.

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