Deal Analysis: In massive play for storage and more, Dell bets $63.1bn on EMC to reshape IT landscape

Deal Analysis: In massive play for storage and more, Dell bets $63.1bn on EMC to reshape IT landscape

Analysts: Brenon Daly, Simon Robinson, John Abbott, Christian Renaud, Scott Crawford, William Fellows, Alan Pelz-Sharpe, Katy Ring, Matt Aslett, Chris Hazelton

Announcing the largest tech deal since the Internet bubble burst, Dell plans to pay approximately $63.1bn for EMC. The debt-laden combination would create a sprawling IT giant with multibillion-dollar businesses in many of the primary enterprise technology markets, including storage, information security, IT services, servers and PCs. (For context, Dell-EMC would be larger than Hewlett-Packard Enterprise (post-split), NetApp, Juniper Networks and Symantec combined.) Dell's bold transformational transaction is not coming cheap, however. The company is valuing EMC significantly more richly than it valued itself when it went private two and a half years ago.

Further, Dell's relatively pricey bulking up comes at a time when a number of rival enterprise IT vendors are slimming down. More to the point, several of these competitors are unwinding earlier blockbuster acquisitions they made in hopes of staying more relevant in a shifting IT market. The arrival of the public cloud has siphoned off billions of dollars that once flowed unimpeded to Dell, EMC and other first-generation technology firms. However, IT customers increasingly lack the appetite to buy, install and manage dozens of 'piece parts' and mold them into a cohesive whole. As a result, we can look at the combination of Dell and EMC as essential if the traditional IT model is to survive the onslaught from public cloud providers, most notably Amazon Web Services.

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Session Preview: #datacentresummit

In less than two weeks, a select group of executives will meet in London to discuss the current issues and best practices surrounding the datacentre industry in Europe. The day’s interactive schedule will feature a number of moderated panel discussions, small group collaboration, as well as topical presentations from 451 Research analysts. Two of our featured analysts, Rhonda Ascierto and Penny Jones, have provided previews of what you will learn and discuss on October 21.
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This Week at IP Expo Europe…

We spent the week in London at IP Expo Europe as a Supporting Partner of the Tech Clinic, providing live insight and analysis to the show’s attendees on hot topics in cloud, infrastructure, cyber security and big data. From where we stood in the middle of the expo hall, the event was a gleaming success.
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The 2015 Storage Executive Summit – What can you expect?

With fall just around the corner, that means it’s just a few weeks until 451 Research be holding our third annual Storage Executive Summit, located at the prestigious Harvard Club of New York, in Manhattan. As in previous years, we expect the event to provide a combination of thought-provoking commentary and practical insight for senior infrastructure and storage decision makers looking to plan the next stage in their IT transformation journey. As chair of the summit, I’m very much looking forward to another engaging, interactive and enjoyable event.
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Tech M&A Gets Grounded in Q3 - What Happened?

Tech M&A Gets Grounded in Q3 - What Happened?
Analyst: Brenon Daly

With both confidence and currency still in strong supply in early summer, it was business as usual for the tech industry's dealmakers at the start of the just-completed third quarter. Corporate acquirers and private equity (PE) firms continued to put up sizable prints early in Q3, keeping 2015 on track for the highest level of M&A spending in 15 years. Everything seemed to be in place for the record romp. And then, about halfway through the quarter, everything got a bit more uncertain as black swans appeared in the summer skies.

Tech acquirers' confidence eroded unmistakably in mid-August as equity markets around the world got routed, with some indexes tumbling hundreds of points in a single session. As the economic outlook dimmed around the globe, valuations for buyers and their holdings dropped as well. If the stock market uncertainty didn't knock buyers out of the tech M&A market entirely, it at least caused them to scale back their acquisitions. Just seven of Q3's largest 20 deals came after the mid-August turmoil, according to 451 Research's M&A KnowledgeBase. Spending in the back half of the quarter dropped 20% compared with the first half.
 
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