Dell and EMC Corporation today announced they have signed a definitive agreement under which Dell, together with its owners, Michael S. Dell, MSD Partners, and investment company Silver Lake, will acquire EMC Corporation, while maintaining VMware as a publicly-traded company. The deal is record-breaking, and is valued at $67 billion, the biggest technology company acquisition to date.
Under the terms of the agreement, EMC shareholders will receive $24.05 per share in cash, in addition to tracking stock linked to a portion of EMC's economic interest in the VMware business. Based on the estimated number of EMC shares outstanding at the close of the transaction, EMC shareholders are expected to receive approximately 0.111 shares of new tracking stock for each EMC share.
Founder and CEO Michael Dell said of the acqusition that "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. 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. I am incredibly excited to partner with the EMC, VMware, Pivotal, VCE, RSA and Virtustream teams, and am personally committed to the success of our new company, our customers and partners."
VMware will remain a publicly-traded company, and continue to provide customers software-defined data center technology, together with its cloud, mobile and desktop offerings. The transaction is expected to be financed through a combination of new common equity from Michael S. Dell, MSD Partners, Silver Lake and Temasek, the issuance of tracking stock, as well as new debt financing and cash on hand.
There are no financing conditions to the closing of the transaction. Dell and related stockholders will own approximately 70 percent of the company's common equity, excluding the tracking stock, similar to their pre-transaction ownership. The transaction is subject to customary conditions, including receipt of required regulatory and EMC stockholder approvals. The transaction is expected to close in the second or third quarter of Dell's fiscal year, which ends on February 3, 2017
Following completion of the transaction, Dell will lead the combined company as chairman and chief executive officer. Tucci will continue as chairman and chief executive officer of EMC until the transaction closes. Dell's headquarters will remain in Round Rock, Texas, and the headquarters of the combined enterprise systems business will be located in Hopkinton, Massachusetts.