Dell-EMC acquisition deal gets positive reactions from the channel

The recent announcement of technology giant Dell regarding acquisition of storage leader EMC at record $67bn has received positive reactions from the channel. Channel partners said that the acquisition, which is said to be the most expensive deal in the history of technology between the two giants, would enable them to strengthen the top position in the industry. However, channel partners said that both the vendors should give a clear idea on the probable changes in the channel policies post acquisition.

Rajeev Mamidanna, Director of Mumbai based Eden Infosol said that EMC’s merger with Dell would help both the vendors to upscale their skills and reach and partners would get advantages of their expanded portfolio.

“EMC is the leader in the storage business. Similarly, Dell is a leading company in PC, Servers, Workstations etc. and it is very strong brand in the enterprise segment. This merger will help Dell to establish itself in the storage space with the help of skills and expertise of EMC. On the other hand, EMC has a golden opportunity to take a lead in the enterprise segment by joining hands with Dell. So it is a win win situation for both the vendors”, Mamidanna said.

Mamidanna said that the proposed acquisition would not impact the channel policies of both the vendors. He said that the deal would enable both Dell and EMC to expand its reach and partner base. However, Mamidanna said that partners would need to upgrade their skills and expertise to efficiently deliver solutions of both the technology giants.

The announcement of EMC’s merger with Dell has created a lot of buzz in the industry, however, the question arises that despite of having a storage portfolio, why Dell agreed to acquire EMC instead of strengthening its existing storage business. Jiten Mehta, owner of Magnamious Systems said that the said acquisition was not convincing as the channel partners were not properly informed about the effects of the deal on the channel business.

“We were ignorant about the said deal till it flashed on the news. We are still waiting for an official communication from Dell. Dell already has got a storage portfolio. Therefore, question is why such a high cost and for what. We would wait and watch how Dell will justify the $67bn deal”, Mehta said.

Sabyasachi Mohanty, Senior BDM at Pentagon System and Services said the Dell-EMC deal was a big competition to the existing players in the industry like HP, particularly in the servers and storage space.

“Storage business is growing in India and EMC is one of the few vendors who are leading in this space. The merger will definitely help Dell to create its space in the storage market, particularly in the enterprise space", Mohanty said. However, he said that both the vendors should announce their channel policy post acquisition.

Ankit Desai, Director, CDP India said that with the EMC acquisition, Dell would have a complete product portfolio and its partners would be at an advantage who would get a benefit of expanded portfolio of offerings and reach.

Dell has inked perhaps the largest deal in the tech history so far, as the privately run PC vendor has agreed to acquire data storage vendor EMC for approximately $67bn. EMC shareholders would receive a total combined consideration of $33.15 per EMC share, that includes $24.05 per share in cash in addition to securities tied to the value of VMware. VMware, however, will remain a publicly-traded company.

The deal brings together two of the world’s greatest technology franchises with leadership positions in servers, storage, virtualization and PCs. It also 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.

The 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. Michael Dell and related stockholders will own approximately 70 percent of the company’s common equity, excluding the tracking stock, similar to their pre-transaction ownership.

Following completion of the transaction, Michael Dell will lead the combined company as chairman and chief executive officer. Joe Tucci will continue as chairman and chief executive officer of EMC until the transaction closes. The transaction is expected to close in the second or third quarter of Dell’s fiscal year ending February 3, 2017 (within the months of May to October 2016).