He has teamed up with Silver Lake, a private equity company, to acquire EMC, an American data storage company, in a $67 billion deal that will transform the computer business that bears his name, reports The Times.
Dell is understood to be funding the deal by raising a staggering $50 billion in debt. Mr Dell said that the company would look to pay down its borrowings rapidly once the deal had closed.
Mr Dell will take EMC private two years after he took his own business off the public markets in a $24 billion buyout. Dell’s founder and chief executive argued yesterday that being unlisted had been helpful for the company’s core computing division.
The combination of the two businesses will to transform Dell into one offering an array of technology services, including data storage and cyber security software, rather than simply making personal computers.
Mr Dell said that the deal had been justified by the “explosion” of data being driven by the need for storage, driven by selfie-obsessed consumers, music-streaming companies and corporate customers generating masses of information.
“We’re now even more prepared for that,” he said. Through the acquisition, he hoped to take on rivals such as IBM and Hewlett-Packard, arguing that “this company is very well positioned to address the move to the cloud”.
It is not a done deal, with EMC able to solicit rival offers before it succumbs, but EMC has been reviewing its options for more than a year and only Dell has approached it.
Mr Dell has driven the negotiations personally, having approached Joe Tucci, his counterpart at EMC, a year ago. He also has made a commitment to the governor of Massachusetts that buying EMC will not lead to the closure of its headquarters in Hopkinton, west of Boston. Dell is based near Austin, Texas, and has a large office in Silicon Valley, California. EMC, which sponsors Wasps rugby club and also has a centre just off the Westway in central London, is one of the largest employers in Massachusetts.
The combination of Dell and EMC was described by one critic as a “head-scratcher” last week and some onlookers continued to question the merits of the tie-up. Ben Rogoff, a fund manager at Polar Capital Technology Trust, said: “Financial engineering like this says more about how inexpensive debt is and, in the case of Dell, how bad the PC market is than the attraction of EMC.”
EMC’s 80 per cent stake in VMware, the software company, will continue to be listed, meaning that the overall value of the $67 billion deal could fluctuate before it closes. Shares in VMware, a $35 billion company, fell by 11 per cent after news of the Dell deal broke, erasing $2 billion from its stock market value.
