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February 24, 2016updated 31 Aug 2016 12:47pm

EMC, Dell $67bn merger remains on track with FTC approval granted

News: EU is expected to approve the deal later this month.

By CBR Staff Writer

Dell’s proposal to buy data storage company EMC for $64bn has cleared a key hurdle, with the US Federal Trade Commission giving the deal a green light.

The FTC’s approval follows the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (HSR) of 1976, an Act which states that companies must not complete mergers or acquisitions until they have made a detailed filing to the FTC and Department of Justice.

Companies then have to wait for those agencies to determine that the transaction will not adversely affect U.S. commerce under the antitrust laws.

The deal however awaits approval from EMC shareholders, in addition to other regulatory clearance in certain other jurisdictions and other customary closing conditions.

Dell CEO and chairman Michael Dell said: "We are delighted that, with this key regulatory milestone now complete, we have taken another step on our path to becoming a combined company.

"Our teams are engaged in integration planning and all transaction-related workstreams are on track."

The deal was announced on 12th October 2015, in what will see the creation of the largest privately owned integrated technology company.

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Dell is acquiring the data storage company to better compete against companies like IBM, Cisco Systems and HP in sectors such as cloud computing, mobility and cyber security.

The company hopes the merger will bolster its position in the market, pushing for leader status in high-growth areas of the $2 trillion information technology market.

While announcing the deal, Dell said that the merger will bring together two technology franchises with leadership positions in servers, storage, virtualisation and PCs.

The combined company will have strong capabilities in the fastest growing areas of the industry, including digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and security.

EMC chairman and CEO Joe Tucci said: "We are very pleased to receive FTC clearance as this takes us a step closer to realizing our vision of creating a global privately-controlled technology company.

"Together, our investments in R&D, focus on innovation and world-class sales and service will enable our customers to accelerate their journey to hybrid cloud and digital transformation."

The deal is expected to close by October this year, following which Michael S. Dell and related stockholders will own approximately 70% of the company’s common equity, excluding the tracking stock, similar to their pre-transaction ownership.

Following completion of the deal, Michael Dell will lead the combined company as chairman and CEO, while Tucci will continue as chairman and chief executive officer of EMC until the transaction is completed.

If the deal goes through, Dell will continue to operate from its Round Rock, Texas headquarters while Hopkinton, Massachusetts will become the headquarters of the combined enterprise systems business.

Dell planned to fund the deal through a combination of new common equity from Michael S. Dell, MSD Partners, Silver Lake and Temasek, as well as by issuing tracking stock, debt financing and cash on hand. It could take on as much $49.5bn in debt to fund the deal.

In 2013, Dell founder and Chief Executive Michael Dell took the company private with private equity company Silver Lake Partners. According to Dell, taking the company private gave it flexibility and agility to focus completely on customers and invest for long-term results.

Dell is expecting that the buyout of EMC will bring together Dell’s strength with small business and mid-market customers with EMC’s strength with large enterprises, which in turn will offer the combined entity growth opportunities and generate significant cash flows.

The European Commission is expected to approve the deal, with the ruling expected to be announced on 29th February 2016, according to Reuters reports.

After the completion of the deal, VMware, a subsidiary of EMC will continue as a publicly-traded company.

Dell has also released its first purpose-built industrial PC (IPC) products, marking an entry into embedded PC market.

It has released Box PC 3000 Series and 5000 Series products, which are fanless, have a rugged design for environments that require little noise and extended operation in harsh environments.

The 3000 Series of PCs are powered by Intel Atom processors and they will be suitable for space-constrained applications, such as retail kiosks, automated vending devices and vehicles.

Intel Core processor powered 5000 Series is designed for performance and I/O scalability. The 5000 Series feature two PCI/PCIe card slots for adaptability and support high-bandwidth, making them ideal for industrial PC and IoT use cases.

 

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