In a historic deal, Round Rock-based Dell Inc. signed an agreement Monday to acquire EMC Corporation, the majority owner of VMWare, for $67 billion. The move is part of Dell’s strategic shift away from PC hardware into the profitable business of virtual data storage for enterprise IT—essentially cloud computing on a massive scale.
The acquisition is expected to bring an even greater focus to Austin as a hub for tech jobs as Dell grows to compete with IBM on enterprise solutions such as virtual data centers.
“Our investments in R&D and innovation along with our privately-controlled structure will give us unmatched scale, strength and flexibility, deepening our relationships with customers of all sizes," Dell co-founder, CEO and chairman Michael S. Dell said in a statement.
Palo Alto-based VMWare offers virtualization software to enterprise IT that simplifies management and scalability issues related to maintaining large networks and supporting increasingly popular cloud-based apps for businesses and consumers.
EMC Corporation acquired VMWare in 2004, then sold a portion of the business in an IPO. VMWare stock has lagged recently, with its market value sliding 15 percent since rumors of the Dell acquisition began circulating. With Dell incorporating virtualization into its business, however, the company will become a privately held behemoth with annual revenue valued at $80 billion, according to the Wall Street Journal.
The deal was financed by new common equity from founder, CEO and Chairman Michael S. Dell, MSD Partners, Silver Lake and Temasek, as well as new debt financing. There are no outstanding financing conditions to closing the transaction.
