Still, Dell was able to post a small gain of 0.5 per cent while larger rivals declined.ĮMC rival Pure Storage rose 5.5 per cent to $US17.51, exceeding its public offering price of last week. During the third quarter, overall shipments declined 7.7 per cent, according to Gartner. While Dell has been outperforming some of its rivals, the company is grappling with sagging demand for personal computers. EMC had 21 per cent of the storage market last year, about twice what Dell had, according to data compiled by Bloomberg. The deal will help Dell raise its profile in data centres, the modern factories of the digital age that house servers, networking gear and storage systems. EMC has benefited from a well-timed acquisition of VMware for $US635 million, which resulted in a more than a 42-fold return on its investment. EMC's revenue is projected to increase about 3 per cent this year, its slowest rate since logging a decline in 2009, according to data compiled by Bloomberg. While the company has been focusing on newer products such as flash arrays that speed up data retrieval, where it's growing more rapidly, that hasn't been enough to lift sales growth. They were relentless and creative in getting to the best possible answer for the company's owners."ĮMC is facing weaker demand for its older, pricey storage models. "EMC's board and management really delivered for shareholders," Jesse Cohn, an Elliott portfolio manager, said in an interview. Elliott had pushed for EMC to sell itself or spin off VMware, of which the storage company is the majority owner. ![]() The Dell CEO contacted Tucci about a year ago, and the companies' boards started working on the agreement in the spring, said the person, who asked not to be named because the details haven't been disclosed.ĮMC, which has been publicly traded since 1986, had been looking at strategic options for boosting its share price. He has agreed to stay at the company through the close of the deal and may stay longer, the person familiar with the matter said. 2 position in servers, the powerful machines that help companies handle big computing challenges.įor EMC, the agreement also addresses pressure from activist investors such as Elliott Management, who have been agitating for growth and resolves long-standing questions over succession for CEO Joe Tucci. The deal will combine EMC's dominance in devices that store data with closely held Dell's No. He also is using debt, the VMware tracking stock and cash on hand. He is financing the takeover with his MSD Partners investment vehicle, Silver Lake and Singapore state-owned investment company Temasek Holdings. The combined company will be run by Michael Dell, the chief executive officer of the company he founded and took private for about $US25 billion two years ago. While the agreement has a provision that lets EMC talk to other potential bidders, the company doesn't expect any, a person familiar with the matter said. The purchase price of $US33.15 a share is 28 per cent above EMC's closing level on October 7, just before reports of a deal surfaced. "Eventually, big customers are going to want to buy from fewer suppliers, and if you have everything under the same roof, you have a better chance." ![]() They couldn't have worked it out better," said Rajesh Ghai, an analyst at Macquarie Group. "From EMC's perspective, this is a great deal. For EMC, the combination may mollify activist investors clamouring to see more growth. The deal, which founder Dell is funding with partners such as Silver Lake, will help the personal-computer maker broaden its product lineup to respond to enduring threats from perennial rival Hewlett-Packard and upstarts such as Nutanix. ![]() ![]() Michael Dell's acquisition of EMC would be Dell's second big buyout in as many years. Dell will add almost $US50 billion to its debt load to complete the purchase, a person familiar with the matter said, on top of the $US11 billion it already is carrying. EMC's stock was little changed at 10.38am in New York. The computer maker plans to pay $US24.05 a share in cash plus tracking stock in EMC's prize holding, software maker VMware, valued at about $US9 for each EMC share. Dell agreed to buy EMC for about $US67 billion in the largest technology acquisition ever as Michael Dell looks to leverage EMC's dominance in storage devices amid intensifying competition.
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