Dell buys EMC which is twice its size for $67B

■ Headquarters: Dell plans to combine its server business with EMC’s data-storage business, and that operation will continue to be based in EMC’s hometown of Hopkinton.

The acquisition comes only two years after Michael Dell, along with Silver Lake, pulled off one of the largest technology leveraged buyouts in history – a near-$25 billion deal to take the company he founded in his college dorm room private.

While IBM, Cisco, Oracle Corp and Hewlett-Packard could potentially be suitors for EMC, the chances of them challenging Dell with a rival offer are slim, people familiar with the matter told Reuters.

Terence Liao (廖仁祥), general manager of Dell’s Taiwan branch, said the acquisition of EMC would help Dell maintain its competitive edge among end-to-end solutions providers, which supply all the software and hardware requirements of a customer. The deal valued EMC at $33.15 per share.

The deal will be financed through a combination of new equity from Michael Dell, MSD Partners, Silver Lake and Singapore state-owned investor Temasek Holdings as well as the issuance of the tracking stock, new debt and cash on hand.

The deal also requires Dell to pay EMC a termination fee of $4 billion under specified circumstances and in certain instances, an alternative termination fee of $6 billion, EMC said in a regulatory filing. “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 center, converged infrastructure, hybrid cloud, mobile and security”.

Dell said the deal would have a “neutral to positive” impact on its credit rating.

VMware shares dropped 6.9 percent in premarket trading Monday and closed down 8.1 percent, at $72.27.

The deal has not been done by Michael Dell alone.

The takeover will give Dell access to EMC’s strong presence in owning and running data centres, most visible to United Kingdom residents through its huge EMC data storage tower on the M4 near Brentford.

Mr Dell will lead the combined companies.

EMC also reported preliminary earnings for the third quarter, saying that profit excluding certain items will be 43 cents a share, less than the 45-cent average estimate of analysts polled by Bloomberg.