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EMC-Dell: Biggest Tech Merger Of All Time

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EMC-Dell: Biggest Tech Merger Of All Time
  • The share price of EMC Corporation (NYSE: EMC) has increased 16.87 percent over the past month, reaching a high of $27.863 on Friday.
  • Daniel H. Ives of FBR & Co. has maintained a Market Perform rating on the company.
  • The “historic” merger with Dell Inc. was completed on Monday. EMC shareholders will receive $24.05 per share in cash. The deal is valued at $67 billion.

Analyst Daniel Ives mentioned that this deal “would mark the largest tech deal ever at ~$55 billion to $60 billion,” while elaborating that the initial offer price of $28-$30 per EMC share was received with “with massive frustration and angst among EMC investors,” the current price of $33 appears to have been “much better” accepted by the Street.

Related Link: Dell + EMC = VMware Unchained?

Although “many on the Street are hoping for a higher bid,” Ives believes that this is unlikely. Dell might consider selling its ownership stake in VMware, Inc. (NYSE: VMW) down to 60-70 percent to fund the transaction.

“While Dell obtaining the potential $30 billion to $40 billion in debt financing is still a question mark for the Street, we believe Dell would look to sell off some of the non-core units to get cash as well as sharpen the focus at the combined tech behemoth,” Ives explained.

Dell is also likely to sell its RSA unit, as well as the Pivotal joint initiative going forward, “as the core storage and cloud capabilities from EMC and VMware remain the underlying attractiveness of this deal,” the report further said.

In terms of the succession plan, CEO Joe Tucci of EMC is in the process of retiring and Michael Dell will take over as the CEO of the combined entity. Ives believes that the EMC/Dell deal would have “wide reaching ramifications” for the “tech landscape for years to come.”

Latest Ratings for EMC

DateFirmActionFromTo
Sep 2016TerminatesBuy
Aug 2016MaintainsHold
Jul 2016DowngradesOutperformMarket Perform

View More Analyst Ratings for EMC
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Posted-In: Daniel H. Ives DELL FBR VetrAnalyst Color Reiteration Analyst Ratings Best of Benzinga

 

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