Computer technology company Dell and corporate IT business EMC have signed a definitive agreement for Dell to purchase EMC in what is the biggest deal in technology to date.
Here are six things to know about the agreement.
1. Dell plans to acquire EMC for $67 billion, making it the biggest tech deal of all time, according to CNN Money.
2. The acquisition helps Dell transition from a consumer PC business to an IT solutions provider, according to the report. Currently, Dell lags in competitive edge against other tech giants such as Amazon, Google and Microsoft, all of which jumped onto new technology trends like the cloud.
3. EMC makes servers, owns security company RSA and has an 81 percent stake in VMware, the company responsible for the software that allows businesses to run multiple operating systems on their devices at once.
4. Dell is a private company and will remain so for now, according to the report. VMware will remain publicly traded under the agreement.
5. "The combination of Dell and EMC creates an enterprise solutions powerhouse bringing our customers industry-leading innovation across their entire technology environment," said Michael Dell, founder, chairman and CEO of Dell. "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, cloud and security. Our investments in R&D and innovation along with our privately-controlled structure will give us unmatched scale, strength and flexibility deepening our relationships with customers of all sizes."
6. However, not everyone in the industry is convinced the deal is good for the tech market. Victor Basta, managing partner at Magister Advisors, M&A advisors to the technology industry, said in a statement, "This is the largest ever pure-play technology deal, but it is not about technology. It is about industrial concentration rather than confirmation, which says a great deal about soaring valuations in the tech industry. You would expect a $67 billion deal to shift the plate tectonics of the industry, but this is far from that.
"EMCs VMWare software business — the only potentially transformative element — is left out of the Dell deal altogether. The big bet Dell/EMC are making is that corporate IT budgets remain healthy, and there are enough economies of scale to increase margins for the combined company. Dell must also be betting that they can apply their proven sales and marketing nous from their days at the height of the PC trade to the enterprise storage market and become a top tier choice."
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