Dell → EMC
Two years after going private, Dell agreed in October 2015 to buy EMC for about $67bn — the largest technology acquisition to that date — paying partly with a tracking stock tied to EMC's stake in VMware, a structure that shaped Dell's finances until VMware was spun off six years later.
A Silver Lake-backed, debt-funded deal paying $24.05 a share plus a VMware tracking stock, then the largest technology deal on record.
- Value
- $67B
- Announced
- October 2015
- Completed
- September 2016
- Sector
- Technology
- Deal type
- take-private
- Acquirer
- Dell (United States)
- Target
- EMC (United States)
Why it mattered
Michael Dell had taken his company private in 2013 to rebuild it away from the stock market. EMC, the storage group that owned 81% of VMware and ran its businesses as a loose "Federation", was under pressure from Elliott Management, holder of 2.2% of its shares, to change that structure. By the Wall Street Journal's estimates, in 2014 Dell had $27.3bn of revenue from PCs and $8.9bn from servers; EMC had $16.5bn from its core storage business, $6bn from VMware and $1bn from RSA Security.
The terms announced on 12 October 2015 gave EMC shareholders $24.05 a share in cash plus about 0.111 of a new tracking stock linked to part of EMC's VMware interest. Valuing that stock at VMware's average price of $81.78 on 7 October, the package came to $33.15 a share, about $67bn, and would create the world's largest privately controlled integrated technology company. The equity came from Michael Dell, MSD Partners, Silver Lake and Temasek; the rest from new debt, the tracking stock and cash. The currency moved at once: VMware's shares fell 10% after the announcement, cutting the deal's value to about $63–64bn. It closed on 7 September 2016, creating Dell Technologies, with $45.9bn of new debt and $4.4bn of privately placed shares.
What it left behind
Dell sold Dell Services, Dell Software Group and EMC's Enterprise Content Division for $7.0bn to repay debt, and RSA Security for $2.075bn in 2020. The tracking stock became Dell's route back to the market. Its 2018 plan to buy out the tracking-stock holders first offered about 60 cents on the dollar; after the activist Carl Icahn sued, the offer was raised to 80 cents, $14bn in all, and Dell Technologies became a public company on 28 December 2018 without an IPO. Dell spun off VMware on 1 November 2021, and Broadcom bought it on 22 November 2023 in a deal valued at $69bn. The storage business stayed, though the Dell EMC brand was phased out around 2020. A tracking stock can close a valuation gap at signing, but it creates a separate class of holders whose exit has to be negotiated later, possibly with an activist at the table.