Dell’s buyout of EMC (and VMware) is the largest tech acquisition to date

Dell is buying EMC, a cloud computing and storage company, for US$67 billion. It’s the largest technology industry acquisition to date.

Dell, of course, makes Windows-based personal computers. EMC provides data storage, information security, virtualization, analytics, cloud computing and other products and services that enable businesses to store, manage, protect, and analyze data. VMware, which makes such products as VMmare Fusion (which allows users to run Windows on a Mac without rebooting), is a subsidiary of EMC.

The deal should help privately held Dell diversify from a “stagnant” consumer PC market and give it greater scale in the more profitable and faster-growing market for cloud-based data services, according to Reuters (http://tinyurl.com/q6hky3x). By combining Dell’s server businesses with EMC’s storage and virtualization assets, the new, enlarged company will have a broader range of products to challenge Cisco Systems Inc, IBM and Hewlett-Packard in the areas of cloud computing, mobility and cyber security, the article adds.

Forrester analyst Glenn O’Donnell tells ComputerWorld (http://tinyurl.com/npgv9na), the expects the impact of the merger on VMware customers to be minimal. “You can basically look at this as some musical chairs at the high end,” he says. But other analysts say there could be significant opportunities for Dell to combine its hardware with VMware’s software.

The VMware deal means the return of Dell to the public markets, just a few short years after the company went private. Why? The tracking stock that Dell will issue as part of the transaction. EMC owns roughly 81 percent of VMware, which before the announcement of the deal had a market value of more than $35 billion. The New York Times says (http://tinyurl.com/pzgnb39) Dell couldn’t afford to buy all of EMC, including the interest in VMware, so is paying the cash consideration and issuing a tracking stock to EMC shareholders.

According to InformationWeek (http://tinyurl.com/pdo3aq4), the combined company will be privately held, freeing it from the regulatory scrutiny and earnings pressure faced by public companies. VMware, mostly owned by EMC, will remain a separate publicly traded company.