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With the receipt of endorsement from advisory firms, Dell is all set to acquire EMC for a record $67 billion. A look at what EMC shareholders will receive, and how the mega spend makes sense for Dell.

The Dell – EMC Deal

In October 2015, Dell Inc and EMC Corp (EMC) have signed a definitive agreement where Dell will fully acquire EMC Corp. The deal involves payment of a record $67 billion, comprising of cash and stock. The buyers include Dell Inc, its founder Michael Dell, MSD Partners, and Silver Lake which is a consortium specializing in technology investing. This is slated to be the biggest deals in the tech sector.

The other fully owned listed subsidiary of EMC, VMWare Inc (VMW) which specializes in security and mobile device management, will continue to remain a separate publicly listed company.

What’s In It For EMC Shareholders?

Each EMC shareholders will receive cash of $24.05 for each EMC share they hold. To account for the VMWare subsidiary’s full ownership by EMC, the shareholders will also receive a tracking stock tied to EMC’s financial interest in VMWare. Going by the financials and estimated outstanding shares, EMC shareholder are expected to receive 0.111 additional share of EMC Corp.

The Combined Tech Giant

Dell has had a tough times with the shrinking PC market. Except for its enterprise segment, most of Dell’s businesses are struggling.

With its strong product portfolio, smooth advancements in Big Data, and increasing business in cloud computing, EMC will complement the Dell offerings. The combined entity will bring together efficient capabilities across storage, servers, virtualization and desktop computing devices. The tech behemoth can build upon the EMC’s expertise on software defined data centers, hybrid cloud offerings, and converged infrastructure. VMWare will add to the mobile device management and security segments. (For more, see Does the Dell/EMC Deal Make Financial Sense?)

Pat Gelsinger, CEO of VMware is optimistic about the deal and quotes it to be a potential accelerant for VMWare business. Having sailed through acquisitions, Gelsinger says “his company has a great reputation of executing successful integration tactics, which will prove useful in light of Dell's recent purchase”. (For more, see Dell Announces EMC Deal, Consumer Confidence Grows)

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