Dell buys EMC for $67 billion

(BVO) – It’s the biggest tech deal ever. Dell is buying the data storage giant EMC for about $67 billion in cash and stock. It will pay a 19 percent premium.

The takeover will help CEO Michael Dell’s privately held company further diversify away from the maturing PC business toward the faster growing market for managing and storing data for businesses. EMC’s businesses include data storage, data security, and cloud-computing software makers Pivotal and VMware.

EMC’s VMware will remain a publicly traded company. Activist shareholder Elliott Management, which had pressured EMC to spinoff VMware, said it backs the Dell deal.

FBR Capital Markets senior analyst Daniel Ives said, “EMC’s like a life raft in a storm. Dell came like the Coast Guard and rescued them. The deal changes Dell from a consumer PC company to an enterprise behemoth.”

VMware shares fell. But EMC shares, which shot up on news of the talks, rose further in early trading.

BGC Partners market analyst Mike Ingram:


“EMC shareholders, reasonable deal for them I think over the short term.”

It’s not a done deal yet. Sources tell Reuters EMC will be allowed to shop itself around for better offers. But they say given EMC’s $54 billion valuation, it may not get a better bid.