A merger between Dell, private-equity firm Silver Lake and EMC might be on the cards, as the storage giant considers a few options. The merger would cost Dell $50 billion (£32 billion), making it the largest single-tech acquisition ever.
The move does make sense for Dell, as it moves from a consumer PC manufacturer to a data storage, security and enterprise service provider. EMC would be a large boost for the company’s revenue and add a large clientele to the portfolio.
Dell still holds a lot of debt, $11.7 billion (£7.6 billion) according to recent stats. In 2013, the founder and CEO Michael Dell paid $25 billion (£16.3 billion) to go private, but that hasn’t improved the company’s financial situation too much.
It did move out of the PC market, which lowered its revenue, but added more profit. The company is now focused on competing with IBM, Cisco, Amazon, and Salesforce in the cloud storage, security, and services market.
EMC may come without VMWare, its $32 billion (£20 billion) subsidiary that many investors say should be spun-off into its own company. Similar to eBay-PayPal, investors want to see the more innovative and profitable company move away from its older and less successful owner.
EMC without VMWare would still be great for Dell’s portfolio however, but we assume that the company wants VMWare to be added into the deal. EMC currently has a market price of $50 billion (£32 billion) and Dell aren’t expected to pay over the valuation.
The deal may or may not happen this week, according to sources (opens in new tab). EMC is definitely looking at all its options, which include a sale to other large US companies like HP, IBM or Cisco, all looking for more cloud storage clients.