For $67B, Dell-EMC Deal May Have Little Impact on Tech Industry

Xconomy National — 

OK, so this really happened. For $67 billion, the biggest technology deal in history. What’s surprising is how little impact people seem to think it will have on the industry.

Texas computer giant Dell has agreed to acquire Hopkinton, MA-based EMC (NYSE: EMC) for roughly $67 billion in cash and stock in VMware (NYSE: VMW), which will remain publicly traded. (EMC owns about 80 percent of VMware.) The deal is expected to close between May and October next year.

Michael Dell will lead the combined company as chairman and CEO. EMC chief Joe Tucci will remain at his post until the deal closes. The companies say Dell’s headquarters will remain in Round Rock, TX, while the headquarters of the “combined enterprise systems business” will be in Hopkinton.

One of the big questions about the acquisition was how it would be financed. The companies say it will be through a combination of new common equity from Michael Dell, MSD Partners, Silver Lake, and Temasek, the issuance of tracking stock (linked to VMware), new debt financing (that seems key), and cash on hand.

Michael Dell said in a statement, “Our new company will be exceptionally well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile, and security.”

It’s obviously a huge play for Dell and his partners—and a huge risk. Big acquisitions rarely turn out well in the long term, and in the short term there will be major integration issues and, most likely, a lot of layoffs and buyouts. For EMC’s part, the deal seems like a good outcome for shareholders, given the company’s uphill battles in cloud-based data storage and services.

Nationally, there has been a big wave of interest and investment in enterprise tech sectors where Dell and EMC operate. Plenty of younger companies, from Pure Storage to Infinidat, have developed technologies and business models to compete in the new market.

For the Massachusetts tech ecosystem, the EMC deal is particularly bittersweet. It represents another homegrown technology giant being scooped up by an outside power—from Digital to Netezza to Endeca to Acme Packet. But some would say this tech giant left long ago.