Why is Dell is about to buy a massive data company worth billions?

Why is Dell is about to buy a massive data company worth billions?

Dell is looking to make a big move at buying data storage company EMC Corp. -- and here's why.

Industry watchers are expecting data storage company EMC Corp. to announce that it is being bought by Dell Inc., a major move by the computer manufacturer that could have ripple effects in the industry.

EMC has reportedly asked for a provision in the merger agreement that would allow it to solicit bids from other parties, in exchange for paying a fee to Dell if they decide to go with another company, according to a Reuters report.

EMC apparently is wanting to include that provision to assure shareholders that the Dell move is the best one, rather than going with other suitors like IBM, Hewlett-Packard, or Cisco.

EMC is a big company, valued at $53.6 billion, making this a major move by Dell, and it’s why Dell is the frontrunner to snap up EMC — the other suitors are unlikely to make a rival offer.

However, Chief Executive Joseph Tucci wanted to assure shareholders and thus included the clause, which isn’t terribly unusual in such merger deals, according to the report.

Currently, Dell and EMC are in discussions with banks about debt financing, which has been progressing through the weekends with a possible deal looming early this coming week.

If Dell does pull the trigger on EMC, it would be the largest technology sector deal on record, according to the Reuters report.

Why is Dell making such a splash? It appears that the computer manufacturer hopes to diversify away from the personal computer market it has been such a major player in, and get into newer, hotter markets with bigger margins, like the increasing demands for data storage.

Dell will dip into its cash reserves to make the buy most likely, although it will provide a special stock to shareholders at EMC.



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