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Dell, EMC Tie-Up to Close on 7 September
Wednesday 31 August 2016

31 August 2016 - US-based PC maker Dell Inc. and EMC Corp. (NYSE: EMC) plan to close the transaction to combine Dell and EMC on 7 September, the companies said on Tuesday.
Dell Technologies, the name of the new combined company, will begin operating immediately following the close of the transaction.
The 30 August announcement follows regulatory approval of the Dell and EMC transaction by China's Ministry of Commerce (MOFCOM), which has granted clearance for the companies' proposed combination.
MOFCOM approval was the final regulatory condition to closing the transaction. EMC shareholders approved the transaction on July 19, with approximately 98 % of voting EMC shareholders casting their votes in favor of the merger, representing approximately 74 % of EMC's outstanding common stock.
This merger is among Denali Holding Inc., Dell Inc., Universal acquisition Co., and EMC.
Last October, US-based PC maker Dell and EMC signed a definitive agreement under which Dell, together with its owners, Michael S. Dell, founder, chairman and chief executive officer of Dell, MSD Partners and US-based technology investor Silver Lake will acquire EMC Corp., while maintaining VMware as a publicly-traded company.
Under the terms of the agreement, EMC shareholders will receive USD 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.
Assuming, for illustrative purposes, a valuation for each share of tracking stock of USD 81.78, the intraday volume-weighted average price for VMware on 7 October 2015, EMC shareholders would receive a total combined consideration of USD 33.15 per EMC share and the total transaction would be valued at approximately USD 67bn.
The value of the tracking stock may vary from the market price of VMware given the different characteristics and rights of the two stocks.
EMC's board approved the merger agreement and intends to recommend that stockholders of EMC approve the agreement.
The combination of Dell and EMC will create the world's largest privately-controlled, integrated technology company.
Dell/EMC would be a leader in the extremely high-growth areas of the USD 2tn information technology market with complementary product portfolios, sales teams and R/D investment strategies, the companies said.
The transaction combines technology franchises with positions in servers, storage, virtualization and PCs and it brings together strong capabilities in the fastest growing areas of the industry, including digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and security.
VMware will remain a publicly-traded company and continue to provide customers value through leading software-defined data center technology, together with its cloud, mobile and desktop offerings.
This transaction is expected to accelerate VMware's growth across all of its businesses through significant synergies with Dell's solutions and go-to-market channels.
VMware remains committed to investing in and partnering with its strong, industry ecosystem.
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% of the company's common equity, excluding the tracking stock, similar to their pre-transaction ownership.
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, Mass.
The transaction is expected to have a neutral to positive impact on Dell's current corporate credit ratings. The combined company will focus on rapidly de-levering in the first 18 to 24 months following the closing of the transaction, and on achieving and maintaining investment grade debt ratings.
In connection with the financing of the transaction and prior to or at the time of its closing, Dell expects to redeem any outstanding 5.625% senior first lien notes due 2020.
Morgan Stanley and CO LLC is acting as lead financial advisor to EMC and provided a fairness opinion to EMC's board of directors. Evercore Partners also provided a fairness opinion to EMC's board of directors, and Needham and company provided financial assistance to EMC.
Skadden, Arps, Slate, Meagher and Flom LLP is acting as legal advisor to EMC. J.P. Morgan is acting as lead financial advisor to Dell and Silver Lake. Credit Suisse and J.P. Morgan (in alphabetical order) are acting as global financing coordinators.
Barclays, BofA Merrill Lynch, Citi, Credit Suisse, Deutsche Bank Securities Inc., affiliates of Goldman, Sachs and Co., J.P. Morgan, and RBC Capital Markets are acting as financial advisors and are providing debt financing to Dell.
Simpson Thacher and Bartlett LLP is acting as legal advisor to Dell and Silver Lake. Wachtell, Lipton, Rosen and Katz is acting as legal advisor to Michael Dell and MSD Partners.
Details
Date Published: 31/08/2016
Target: EMC Corp
Country: USA
Deal Size: 67bn (USD)
Sector: Computer Hardware
Type: Corporate acquisition
Financing: Cash and Stock
Status: Agreed
Vendor:
Buyer: Dell Inc., Michael S. Dell, MSD Partners, Silver Lake
Buyer Advisor: J.P. Morgan , Credit Suisse , Barclays , BofA Merrill Lynch , Citi , Credit Suisse , Deutsche Bank Securities , Goldman, Sachs and Co , RBC Capital Markets , Simpson Thacher and Bartlett LLP , Wachtell, Lipton, Rosen and Katz
Comment:
Deal to close on 7 September

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