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November 11, 2015

Could Dell-EMC deal be thwarted by the taxman?

News: Concerns emerge over payment methods for the acquisition.

By Alexander Sword

Sources close to Dell have denied reports that its acquisition of EMC could be scuppered by a $9 billion tax bill.

Reports emerged suggesting that factors including its use of a new type of stock share to help pay for the acquisition, as well as issues surrounding EMC’s ownership of VMware, could prevent the deal from qualifying for the tax treatment considered essential for the deal.

The Re/code report suggested that Dell insiders are concerned that the offer of a stock tracking VMware to EMC shareholders as part of the payment in the deal will attract scrutiny from the Internal Revenue Service.

However, Reuters reported that sources close to Dell had disputed the story, saying that the tracking stock would be treated in line with previous similar transactions.

In the deal announced in October, Dell is paying $67 billion for EMC and is already taking on a $49.5 billion debt burden. Reports emerged recently that Dell might sell $10 billion in non-core assets before buying EMC.

 

Read Michael Dell’s thoughts on the EMC deal from his Dell World keynote here.

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