#DellEMC: The Implications of the Largest Technology Acquisition

This will empower Dell to address new business opportunities and boost its efforts to create top-tier enterprise solutions in the wake of the digital transformation drive.

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Dell announced a deal to buy EMC for roughly $67 billion in one of the tech industry's biggest mergers ever, which is twice bigger than the Compaq-HP deal. EMC stockholders will receive about $33.15 per share in cash and a stock that is linked in its VMware business, which will remain an independent, publicly traded company. The deal would strengthen the company to provide end-to-end infrastructure both in terms of both storage and devices.


Following the completion of the deal, Michael Dell will lead the combined company as chairman. Joe Tucci will continue as chairman and chief executive officer of EMC until the transaction closes, according to Dell press release.  Mr. Dell and related stockholders will own approximately 70 percent of the company’s common equity, excluding the tracking stock, similar to their pre-transaction ownership, the release says.


Why this deal? What they say…
Joe Tucci, chairman and CEO, EMC
: “…the waves of change we now see in our industry are unprecedented and, to navigate this change, we must create a new company for a new era.”


Michael Dell: “Our new company will be exceptionally well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software-defined data centre, converged infrastructure, etc.”


Egon Durban, Silver Lake: “…the strategic integration will generate unparalleled depth and breadth across servers, storage, virtualization and the next era of converged infrastructure.”


Implications of the tech deal
The acquisition makes Dell the largest player in storage giving it the entrance to new markets while allowing customers to have more options. It takes partner portfolios from document management to personal computers to storage to virtualization to security, and to servers. The broadest line of storage hardware as well as data centre software from VMware will help Dell leverage new opportunities.


Given the declining demand for PCs globally, the acquisition will help the PC maker tap into the market for managing data for organizations while being in a better position to compete with the likes of HP, IBM and Cisco. 





More importantly, this will help Dell position itself as an enterprise solution provider, not just a PC and server maker.  "I believe the acquisition of data storage company EMC will help Dell to stay relevant. This deal signals the end of the client/server era and the beginning of the cloud/mobile/social computing industry," says CTO of Adarsh Credit.


The acquisition has implications for Indian market as well. According to IDC’s Asia/Pacific Quarterly Enterprise Storage Tracker, India External storage market witnessed a significant year-on-year growth (in vendor revenue) and stood at 68.5 million USD in Q2 2015. The deal puts Dell in a better position to leverage this market growth.


The growth, says IDC, was majorly attributed to a multi-million dollar deal from a Communications & Media organization. Storage market is expected to be further driven by projects around Surveillance, e-governance, Railways, Healthcare and Online Education Institutions. Recently, Dell won a deal with the leading Indian e-commerce company Flipkart to deploy its servers.


All in all, the acquisition will unite Dell’s strength with small business and mid-market customers with EMC’s strength with large enterprises to fuel growth.



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