PC manufacturers Dell have agreed to purchase data storage company EMC for $67 billion, in the biggest deal on record in the technology sector.
The deal—in which EMC shareholders receive $33.15 per share, with $24.05 in cash—will make Dell Chief Executive Michael Dell the chairman of EMC and will create the world's largest integrated technology company.
U.S. chipmaker Avago Technologies' $37 billion offer for rival Broadcom, which was made in May and is yet to be finalized, was previously the biggest technology deal on record, CNBC reported.
Dell shipped more than 10.1 million PCs in the third quarter of 2015, making it the world's third-biggest PC manufacturer behind Lenovo and HP. However, falling demand for PCs—shipments fell by 9.5 percent in the second quarter of 2015, the steepest decline in almost two years—means Dell is looking to expand into other areas. EMC is the world market leader in data storage, with 19.2 percent of the market share as of Q2 2015. VMware, a subsidiary of EMC that is focused on cloud and virtualization services, will remain independent as a publicly-traded company.
The acquisition would create an "enterprise solutions powerhouse," said Michael Dell, adding that the new company would be "exceptionally well-positioned for growth in the most strategic areas of next generation IT."
The deal includes a so-called 'go-shop' provision that allows EMC to consider bids from other parties and pay a discounted breakup fee to Dell if another deal is agreed, though it is unlikely that a rival offer will appear, according to Reuters.
Stuart Williams, vice president of research and digital at U.S.-based analysts Technology Business Research, says the deal is an example of "two tech titans" consolidating in order to take advantage of scale and that it will help Dell to win business in large industries. "Dell is very strong in small business [to] mid-market, EMC is very strong in large enterprises," says Williams.
In a statement before the deal was confirmed, Glenn O'Donnell, research director at IT industry analysts Forrester, said buying EMC would make Dell a serious player on the integrated IT scene. "A combined Dell-EMC would be a serious threat to HP. Dell is fairly weak on storage, and EMC will help give it a full portfolio that it needs to compete with HP, Cisco, IBM and the growing threat from Huawei."
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