Mega-merger mania hits the tech industry: Dell is buying EMC for $67 billion

Dude, you’re getting Dell.
Dude, you’re getting Dell.
Image: Reuters/Bobby Yip
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Dell has announced the largest-ever deal between technology companies. The computer maker will buy data storage company EMC for $67 billion.

Dell is keen to move away from the sluggish personal-computer market and expand into data storage and related services. The conglomerate created by combining Dell and EMC would establish “leadership positions in servers, storage, virtualization and PCs,” the companies say. It would also boast “strong capabilities in the fastest growing areas of the industry, including digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and security.”

The deal goes against the current fashion for greater focus at big tech companies, with groups like HP and eBay splitting themselves up into smaller pieces to serve specific parts of the market. However, the Dell-EMC mega-deal is in tune with the merger mania gripping big business more generally.

At more than $3.6 trillion, the value of announced deals so far this year has already surpassed last year’s full-year total:

Mega-deals worth $10 billion or more are already breaking records. Dell’s hefty purchase of EMC is just the latest in a string of monster M&A transactions, topped (so far) by the $100-billion pursuit of brewer SABMiller by Anheuser-Busch InBev. Low borrowing costs, improving economic growth, and industry-specific factors are stoking the animal spirits among executives (and eager investment bankers):

Dell delisted from the stock market in 2013, and its purchase of EMC will take it off the market as well. That may spare more shareholders the pain that often stems from value-destroying large deals.

The deal is expected to close next year. It contains a “go-shop” clause that allows EMC to seek better offers in the next 60 days. The chances of a challenge from one of Dell’s rivals is slim, Reuters reports, perhaps because they know how hard it is to make big deals work.