Dell ready to climb the century: 50 billion to buy EMC – Il Sole 24 Ore

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This article was published on Oct. 12, 2015 at 10:42.

It would be the biggest deal of all time in technology. And to define the deal, which various sources give now close officialdom (the announcement is expected for today, Monday, October 12, as reported by Bloomberg for example), would be two old acquaintances of information technology made in the USA, namely Michael Dell and Joe Tucci, respectively CEO of Dell and CEO of EMC.

The news coming from overseas speak of talks between the parties that continued until last night, with the definition of “last minute” to some financial details in support of the operation. In the agreement there would also be a footnote that would leave EMC can accommodate takeover bid most advantageous; a “window” but analysts doubt it can be exploited by other hopefuls for the specialist in the field of storage, and we refer to the various Hewlett-Packard, Oracle, Cisco and IBM.

The climb, say sources close to the two companies, is expected to close with a cash transaction of $ 27.25 per share EMC, plus a premium related to the share capital that it holds in VMware. In a nutshell are more than 50 billion dollars that Dell’s going to put on the plate to close the deal (with the intention, of course not confirmed at the time, to cede part of the share of VMware to make money). To finance the transaction, the Texan company would leverage on the issuance of high-yield bonds linked to the capital of the company will come to life after the merger; a risky bet, say some analysts, given the fact that the Federal Reserve expected to raise interest rates before the end of the year, a situation that would increase costs as a result of the funding. Other rumors suggest the use of “tracking stock” linked to the share of VMware not owned by EMC.

Some doubt is fueled also by Elliott Management, the hedge fund that is the seventh largest shareholder of EMC: the idea will be to endorse the deal, after months urged the board to urge him to abandon the participation in VMware? Of course, waiting for the official announcement, there is the fact that the title of EMC rose 2.5% in the last hours to 27.86 dollars, that VMware has a value of market capitalization of $ 35 billion and the debt of Dell oscillates around 12 billion.

The third largest producer of PCs, since returning to the arms of founder Michael Dell (alongside the fund Silver Lake), following a massive acquisition of shares and all ‘exit from the lists of Wall Street, is focusing strongly on new business (security, data center and storage) shifting the emphasis from the historical computer business. Get your hands on EMC, from strategic point of view, would be a move vital to give further accelerated to its ambitions in the field of enterprise, creating a giant capable of offering solutions and services tailored to the entire IT infrastructure. C ‘ however, one obstacle to overcome considerable, of a purely financial. Soon we will know.

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