inbox shifter Dell has ended speculation and announced its takeover of storage technology firm EMC in a deal worth more than $67 billion today.
What will be the largest tech deal of all time has been conducted without some of Dell’s top managers knowing about it. In fact a lot of them were out of the country when it was leaked.
Sources say that the talks have been conducted directly between CEOs Michael Dell and EMC’s Joe Tucci on the QT.
Numerous terms had not been finalised as of late Sunday night including plans to protect both parties from movements in the value of EMC shares after the deal is announced.
EMC will be allowed to seek superior offers from other companies. But that is just to stop the company being sued by shareholders. The only people likely to counter Dell’s offer HP, Oracle, Cisco Systems and IBM are not interested.
The offer will include cash amounting to $27.25 per EMC share, plus the additional value of tracking stock to account for the value of EMC’s stake in the cloud software firm VMware that would bring the value of the transaction to over $30 per share. Dell will maintain majority control of VMware but will likely sell or distribute a portion of EMC’s equity in VMware to raise cash and offset some of the debt.
Dell is getting the cash by issuing high-yield bonds that will be linked to equity in the combined company.
It is not clear if the deal has been approved by Elliott Management, the activist hedge fund that is EMC’s seventh-largest shareholder. Elliott wanted EMC to spin off its stake in VMware as a way of boosting shareholder value.