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Dell buys EMC in tech industry's largest ever deal

PLUS: New boss, new direction at Dell NZ.

Tue, 13 Oct 2015

Dell and private equity firm Silver Lake will buy data-storage company EMC for about $US67 billion in cash and stock, marking the biggest technology industry takeover ever, the Wall Street Journal reports.

The deal represents a 28% premium on EMC’s share price before it was announced.

Dell has taken on around $US12 billion in debt and issued new tracking stock shares to help cover the cost of the acquisition.

It represents the latest in a series of strategic moves and acquisitions as Dell has moved from its roots of direct-selling PCs. The company has already diversified into areas such as IT services and network security, and has had a long-standing partnership with EMC.

Diversifying in New Zealand
NBR recently met Dell’s New Zealand country manager, James Arnold (also known for his stints at Lenovo and IBM), who was appointed earlier this year.

Mr Arnold said Dell’s aim was to become a one-stop shop for companies’ IT needs. Assuming it gains regulatory approval, the EMC deal will see Dell inherit business across a wide swathe of corporate New Zealand and government, where EMC’s storage technology is a mainstay.

Even within its once-core PC operation, the company is diversifying, he said.

He was looking to build a reseller channel and, shortly after he spoke to NBR, Dell NZ appointed Ingram Micro as a distributor.

Mr Arnold’s second key aim was to build relationships with tier-one systems integrators such as Spark Digital, Datacom and Dimension Data.

The Dell NZ boss said Michael Dell’s move to take his company private in 2013 (it was previously listed on the Nasdaq) had given it more flexibility. As it transforms to a full-service company, there is less focus on quarter-to-quarter results and more on long-term strategy, he says.

Mr Dell (50) will lead the combined company. EMC chief executive Joe Tucci (68) will retire when the deal closes.

EMC owns 80% of virtualisation software company VMware, which is publicly traded. VMWare will remain on the Nasdaq.

Financials
On July 22, EMC EMC reported a quarterly profit of $US487 million from $US589 million a year earlier.

Quarterly evenue grew 2% to nearly $US6 billion

For the quarter to February 1, 2013 — it's last before going private — Dell made a $US530 million profit, down from $US764 million in the year-ago quarter, on revenue that fell 11% to $US14.3 billion

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Dell buys EMC in tech industry's largest ever deal
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