$67B Dell-EMC deal: Big bet on computer consolidation

Dell Computer's $67 billion cash-and-stock offer to buy computer-storage-device maker EMC Corp. is a big bet by founder Michael Dell to add products and clients, combine costs, and keep his company relevant in a slower-growing corporate-computing market. "The deal would combine EMC's dominance in devices that store data with Dell's No. 2 position in servers, the powerful machines that help companies handle big computing challenges," writes Bloomberg here.   Dell statement here.

Founder Dell has been seeking ways to recharge his company since taking it private for $24.5 billion with backing from private equity investor Silver Lake and Microsoft two years ago. (Dell was a dominant and much-traded U.S. computer-manufacturing stock through the 1990s but is less important with the shift to software and cloud services. I talked after the going-private deal with Stephen Felice, a senior Dell lieutenant raised in Northeast Philadelphia; he left later that year and is now CEO at manufacturer Filtration Group in Chicago.)

"For EMC, the agreement addresses pressure from activist investors who have been agitating" for EMC to spin off software-maker VMWare or find another plan for growth," Bloomberg added. EMC boss Joe Tucci "has agreed to stay at the company through the close of the deal." Dell will run the combined companies from Texas; EMC is based in Massachusetts. EMC gained cloud-computing exposure to SAP AG and other big business-software companies when it bought VirtuStream earlier this year.

"The deal will help Dell raise its profile in data centers, the modern factories of the digital age that house servers, networking gear and storage systems. EMC had 21 percent of the storage market last year, about twice what Dell had, according to Bloomberg data."