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Dell-EMC Buyout Financing: So What’s Next?

Dell’s pending $67 billion buyout of EMC has hit a snag with lenders, but the first of several financial windows to get the deal done still remains open.

Update February 17, 2016: Dell Chief Integration Officer Rory Read writes memo for all employees — assuring them EMC deal will proceed as planned.

Original February 11 Report

Dell had hoped to price the first $10 billion of debt it needs for the EMC buyout by the close of February 10. However, the JPMorgan-led negotiators apparently will need another 10 days to wrap up the financing stage, according to The New York Post. The Chinese New Year, which delayed approval of requests from foreign banks’ home offices to participate in the financing, was the main reason for extending the original February 10 deadline, Reuters reported.

The other pending wildcard is Dell’s IT services arm — Perot Systems. Dell has been trying to sell Perot for up to $5 billion, but one of the alleged suitors — Atos of France — has now stated that it’s not bidding to buy Perot. Another potential bidder, Cognizant Technology Solutions, recently shared a weaker-than-expected financial forecast for 2016 — which could reduce the possibility of Cognizant bidding for Perot.

Selling Perot is not a requirement for the Dell-EMC business combination. But a deal could potentially give Dell more breathing room and a stronger balance sheet. Some folks have also wondered if EMC will sell RSA, the $1 billion (or so) security arm of the storage giant.

A day before The New York Post report, EMC Board Member William Green suggested that only an act of God could derail Dell’s buyout of EMC. Michael Dell, EMC CEO Joe Tucci and other leaders from both companies have actively promoted the deal’s value to customers, partners and investors in recent months.

EMC’s business will face a brighter spotlight several times over the next few months as major conferences and strategic gatherings like EMC World, VMware Partner Leadership Summit and RSA Conference unfold.

Michael Dell is scheduled to keynote EMC World. The VMware gathering, meanwhile, is an invite-only event for a few hundred channel partner executives. And it looks like Dell will have a relatively low profile at RSA Conference.

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