Dell, MSD and Silver Lake to buy EMC for $67bn

The transaction follows the joint acquisition by Michael Dell and Silver Lake of Dell for $24.4bn two years ago.

Dell’s owners Michael S. Dell, his family office MSD Partners and private equity firm Silver Lake have signed an agreement to acquire EMC Corporation for about $67 billion, of which $3.5 billion will be Silver Lake and Dell's equity, a source familiar with the matter told Private Equity International.

The transaction will combine Dell and EMC to form the largest privately controlled technology company with a focus on the info tech industry. EMC’s subsidiary, VMware, which was acquired by EMC in 2004, will remain a publicly traded company.

After the transaction closes, which is expected to happen between May and October 2016, Michael Dell and related shareholders will own about 70 per cent of the company’s common equity. Michael Dell will serve as chairman and CEO of the new company.

Dell said the new company will spend the first 18 to 24 months “rapidly” reducing its leverage from the transaction.
EMC’s board of directors approved the agreement, and the deal is conditional upon EMC shareholder and regulatory approval.

EMC shareholders will receive $33.15 per company share consisting of $24.05 per share in cash plus about 0.111 shares of new stock for every EMC share, based on how many of the company shares are outstanding when the deal closes.

This joint acquisition comes after Michael Dell and Silver Lake acquired Dell for about $24.4 billion in October 2013, following eight months of negotiations.

Additionally, MSD Capital hired Doug Londal last month to lead the firm’s private equity group, which may seek to raise its PE allocation, as reported by Private Equity International.

Spokespeople for Dell and Silver Lake were not immediately available to comment.

Morgan Stanley was the lead financial advisor to EMC and Needham gave financial assistance to the company. Morgan Stanley and Evercore Partners gave EMC’s board of directors a fairness opinion, and Skadden, Arps, Slate, Meagher & Flom served as legal advisor.

JP Morgan was the lead financial advisor to Dell and Silver Lake, while Credit Suisse and JP Morgan are serving as global financing coordinators. Dell received leverage and financial advising from Barclays, Bank of America Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs affiliates, JP Morgan and RBC Capital Markets. Simpson Thacher & Bartlett is the legal advisor to Dell and Silver Lake, while Wachtell, Lipton, Rosen & Katz is legal advisor to Michael Dell and his family office MSD Partners.

MSD Capital, founded to exclusively manage Michael Dell and his family’s assets, has $8.43 billion AUM and Silver Lake manages $23 billion in assets, according to PEI’s Research & Analytics.

Shares of EMC on the New York Stock Exchange were priced at $28.17, up 31 cents or 1.09 per cent from the previous close, giving the company a market capitalisation of $54.22 billion.