Dell has announced that it will acquire business storage and services giant EMC Corporation in a deal the companies estimate to be worth $67 billion. Dell says the acquisition "will create the world's largest privately-controlled information technology company."
By combining Dell's small- and medium-business expertise with EMC's large-business know-how, the companies expect to create a firm that can serve the IT needs of customers of all sizes. The combined companies will focus on areas like "digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile, and security."
EMC's VMware subsidiary will continue to be publicly traded after the deal is complete. Dell and EMC will issue new tracking stock to EMC shareholders "linked to a portion of EMC's economic interest in the VMware business," on the order of 0.111 shares per EMC share. In addition to the value of this tracking stock, EMC shareholders will recieve $24.05 per share in cash for an estimated total offer of $33.15 per EMC share. According to the New York Times, that's about a 27% premium over EMC's share price before the deal was announced.
Dell will finance the deal with new common equity from CEO Michael Dell, MSD Partners, Silver Lake, and Temasek, along with the issuance of tracking stock, new debt financing, and cash on hand. After the deal is complete, Michael Dell will lead the new company as chairman and CEO. Dell, Inc. will remain headquartered in Round Rock, Texas, while the new company's business systems division will be located in Hopkinton, Massachusetts.