ISS and Glass Lewis make recommendations
In July 2016, proxy advisory companies ISS (Institutional Shareholder Services) and Glass Lewis recommended that EMC (EMC) shareholders vote for the EMC-Dell merger. Earlier, another independent proxy advisory company, Egan-Jones Ratings Company, also issued a recommendation that shareholders vote for the merger.
EMC is scheduled to hold a special meeting of shareholders on July 19, 2016. CEO of EMC Joe Tucci said, “We are incredibly pleased with ISS’ support for our proposed merger with Dell. The favorable recommendation from ISS, along with those from other leading proxy advisory firms, is another very strong indicator that the coming together of EMC and Dell is the best strategic option for all stakeholders.”
Deal valued at $60 billion
The EMC-Dell acquisition deal is currently valued at $60 billion. This is $7 billion lower than what the deal was actually worth.
Dell is planning to sell ~$9 billion worth of unsecured junk bonds in backing the EMC acquisition. Dell is largely expected to pay an interest rate of ~10% unless there is a major improvement in the bond market.
Debt yields are high due to the volatile macroeconomic environment. This has resulted in below-par quarterly results for technological (QQQ) heavyweights such as Intel (INTC) and IBM (IBM). Western Digital’s (WDC) debt sale to fund its acquisition of SanDisk (SNDK) was also poorly received by investors.
Dell will thus have to shell out millions of dollars in interest expenses once its acquisition of EMC is complete.