In the largest tech deal in history by far, Dell and partners MSD Partners and Silver Lake agreed to buy EMC today for $67 billion or $33.15 a share.
This is way over the price of $27 and change that was being rumored last week, and makes the deal far bigger than the $37 billion that Avago paid for Broadcom just last May. What makes this deal even more interesting though, is that Dell with a valuation of around $25 billion was by far the smaller fish at approximately half the size of EMC.
The biggest part of EMC by far is VMware, which was included in the deal and will continue to be a separately publicly traded company, but EMC will go private and become part of Dell ending the company’s long history as a publicly traded company.
The two combined companies will make the Dell and EMC the the world’s largest privately-controlled, integrated technology company, according to a statement released by EMC.
As expected, Dell will lead the newly formed organization and long-time EMC CEO Joe Tucci will retire. Tucci has put off retirement a couple of times because of problems finding a suitable successor. Michael Dell will run the combined organization.
The question is with any deal of this sort, how will two massive companies with entrenched cultures come together into a single entity — and that remains to be seen.
Aija Leiponen, an associate professor at Cornell’s Dyson School of Applied Economics and Management thinks the companies could have problems.
“Many if not most mergers actually destroy value, and merging two companies that have had trouble renewing and reviving themselves rarely succeed when combined. The merger is thus extremely risky. EMC and Dell are in complementary segments of the computer industry and if all goes well the two companies might be more valuable together than apart. But that’s a big if,” she said.