Dell is buyingEMC, a $50 billion publicly traded IT giant, for around $67 billion in one of the tech industry's biggest mergers ever, according to Bloomberg, which said the terms of the deal looked like this:Dell plans to pay $24.05 a share in cash plus tracking stock in EMCs prize holding, VMware Inc., valued at about $9 for each EMC share, the companies said in a statement Monday. The price of $33.15 a share is 28 percent above EMCs closing level on Oct. 7, just before reports surfaced that a deal was in the works.Here is the official release from Dell(or you can scroll down for the full text).News of the deal first leaked last week.It's not just the biggest tech merger ever, it's actually twice as big as the previous largest, which was the Compaq-HP deal, valued at $33.4 billion.A complicated mergerThe merger will be complex and costly to execute, given the sheer size and scope of both companies. But the payoff could mean that Dell gets a broader enterprise business, while EMC gets some breathing room after its recent troubles.Dell, EMC, and VMwarewhich specializes in a technology called "virtualization" that helps companies make their data centers more efficienthave all been facing pressure from cloud services like Amazon Web Services, which lets customers outsource their data crunching and data storage needs to one of the e-retail giant's hugely efficient data centers.In addition, Dell has reportedly been hit hard by the sagging PC market, threatening its PC manufacturing business.For its part, EMC has fallen on some hard times. Free software like Hadoop, which can be run on commodity servers, has seriously impacted EMC's storage and data processing businesses, since it removes the need for customers to buy often-pricey software and hardware products.EMC reportedly began a strategic review to explore various options last year. And over the summer, EMCvowed to cut $850 million in expenses, prompting employees to start bracing themselves for mass layoffs.Plus, long-time EMC CEO Joe Tucci was slated to retire in February 2015, but that didn't happen. He has made no secret of the fact that he's searching for his replacement.With the merger, that problem goes away.The full text of the official statement:Michael S. Dell, MSD Partners and Silver Lake Lead Transaction to Combine Dell and EMC, Creating Premier End-to-End Technology CompanyDate : 10/12/2015Brings together the industrys leading innovators in digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and securityEMC stockholders to receive approximately $33.15 per share (based on the assumptions described below) in a combination of cash as well as tracking stock linked to a portion of EMCs economic interest in the VMware businessVMware to remain an independent, publicly-traded companyDell Inc. and EMC Corporation today announced they have 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 Silver Lake, the global leader in technology investing, will acquire EMC Corporation, while maintaining VMware as a publicly-traded company.Under the terms of the agreement, EMC shareholders will receive $24.05 per share in cash in addition to tracking stock linked to a portion of EMCs 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 $81.78, the intraday volume-weighted average price for VMware on Wednesday, October 7, 2015, EMC shareholders would receive a total combined consideration of $33.15 per EMC share and the total transaction would be valued at approximately $67 billion. The value of the tracking stock may vary from the market price of VMware given the different characteristics and rights of the two stocks.The EMC Board of Directors approved the merger agreement and intends to recommend that stockholders of EMC approve the agreement.DELIVERING FUTURE-READY TECHNOLOGIES TO CUSTOMERSThe combination of Dell and EMC will create the worlds largest privately-controlled, integrated technology company. The company will be a leader in the extremely attractive high-growth areas of the $2 trillion information technology market with complementary product portfolios, sales teams and R&D investment strategies. The transaction combines two of the worlds greatest technology franchises with leadership 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.Since becoming a private company, Dell has had the flexibility and agility to focus completely on customers and invest for long-term results. The transaction will unite Dells strength with small business and mid-market customers with EMCs strength with large enterprises to fuel profitable growth and generate significant cash flows. The combined company will consist of strategically-aligned businesses and incubated high-growth assets, fostering innovation, enabling customer choice and attracting and retaining world-class talent .The combination of Dell and EMC creates an enterprise solutions powerhouse bringing our customers industry leading innovation across their entire technology environment. Our new company will be exceptionally well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile and security, said Mr. Dell. Our investments in R&D and innovation along with our privately-controlled structure will give us unmatched scale, strength and flexibility, deepening our relationships with customers of all sizes. I am incredibly excited to partner with the EMC, VMware, Pivotal, VCE, RSA and Virtustream teams and am personally committed to the success of our new company, our customers and partners.Im tremendously proud of everything weve built at EMCfrom humble beginnings as a Boston-based startup to a global, world-class technology company with an unyielding dedication to our customers, said Joe Tucci, chairman and chief executive officer of EMC. But the waves of change we now see in our industry are unprecedented and, to navigate this change, we must create a new company for a new era. I truly believe that the combination of EMC and Dell will prove to be a winning combination for our customers, employees, partners and shareholders."We are excited and honored to invest in the outstanding businesses built by Joe Tucci and his world-class management team. This is an extraordinary opportunity to continue and expand our partnership with the iconic technology entrepreneur Michael Dell and his talented team, said Egon Durban, managing partner of Silver Lake. We believe the strategic integration of EMC and Dell will generate unparalleled depth and breadth across servers, storage, virtualization and the next era of converged infrastructure, creating a global technology platform poised for sustained long term growth and innovation in the years to come. We are doubling down and increasing our investment in this differentiated market leader for the next paradigm of enterprise computing.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 VMwares growth across all of its businesses through significant synergies with Dells solutions and go-to-market channels. VMware remains committed to investing in and partnering with its strong, industry ecosystem.TRANSACTION TERMSThe 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.Mr. Dell and related stockholders will own approximately 70 percent of the companys common equity, excluding the tracking stock, similar to their pre-transaction ownership.Following completion of the transaction, Mr. Dell will lead the combined company as chairman and chief executive officer. Mr. Tucci will continue as chairman and chief executive officer of EMC until the transaction closes. Dells headquarters will remain in Round Rock, Texas, and the headquarters of the combined enterprise systems business will be located in Hopkinton, Mass.Historically, Dell and EMC have maintained conservative financial policies, and have strong track records of cash flow generation and debt reduction. The transaction is expected to have a neutral to positive impact on Dells 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.The transaction is subject to customary conditions, including receipt of required regulatory and EMC stockholder approvals. The transaction is expected to close in the second or third quarter of Dells fiscal year ending February 3, 2017 (within the months of May to October 2016).For further information regarding all terms and conditions contained in the definitive merger agreement, please see EMCs Current Report on Form 8-K, which will be filed in connection with this transaction.Morgan Stanley & CO LLC is acting as lead financial advisor to EMC and provided a fairness opinion to EMCs Board of Directors. Evercore Partners also provided a fairness opinion to EMCs Board of Directors, and Needham and Company provided financial assistance to EMC. Skadden, Arps, Slate, Meagher & 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 & Co., J.P. Morgan, and RBC Capital Markets (in alphabetical order) are acting as financial advisors and are providing debt financing to Dell. Simpson Thacher & Bartlett LLP is acting as legal advisor to Dell and Silver Lake. Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Michael Dell and MSD Partners.EMC and VMware will host a joint conference call with investors on October 12, 2015 at 7:45 am Eastern Time to discuss this transaction. The call will be webcast at www.EMC.com/investor. A replay will also be available atwww.EMC.com/investor.Dell and EMC will host a conference call with media and industry analysts today at 8:45 a.m. Eastern Time. The call will be webcast at https://engage.vevent.com/rt/dellincorporatedao~101215.SEE ALSO:Apple Mac sales are slowing down for the first time in 2 yearsJoin the conversation about this storyNOW WATCH: How The 'Dell Dude' Could Bring Back Dell From Obscurity
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