On the other hand, EMC's CEO Joe Tucci stuck to the "federation" business model, wherein some of the acquired companies operate as separate entities, while they still collaborate on products for large clients. The activist investor group constantly pushed EMC’s management for structural changes to aid shareholders. Key investor Elliott Management had taken a stake of over $1 billion in EMC, making it one of the top five institutional investors. The Role of Silver Lake, Elliott Management And Other PartnersĮMC faced pressure from large institutional investors in mid-2014 to spin off some of the fastest-growing businesses within the company such as Pivotal. EMC’s stock price fell by about 20% since the beginning of the year, before rallying by 15% this month. We have a $29 price estimate for EMC, which is in line with the current market price. Mr Dell and the consortium of investors would own about 70% of the combined company's equity after the completion of the deal, excluding VMware’s tracking stock. Dell will add almost $50 billion in debt to go through with the acquisition. Moreover, the combined company will focus on de-levering over the next 18-24 months following the closure of the deal. Dell maintained that the acquisition would not have a negative impact on Dell’s credit ratings. Michael Dell, founder and CEO of Dell Inc, will head the combined entity after the deal closes. As a result, the total combined purchase price stands at $33.15 per EMC share, taking the total value to $67 billion. For each EMC share, shareholders will receive about 0.111 shares of VMware’s new tracking stock (note: VMware’s stock was trading around $78-82 through the week prior to the announcement). EMC shareholders will receive $24.05 per share in cash in addition to a tracking stock related to VMware. Storage giant EMC signed a definitive agreement with Dell under which the latter will acquire EMC for $67 billion, with EMC-owned VMware remaining a publicly traded company.
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