Originally posted by Steven Burke and Matt Brown on October 8, 2015 on crn.com
A bid to acquire EMC would be just one more sign of how determined Dell founder and CEO Michael Dell is to transform the onetime PC maker into an enterprise computing superpower, solution providers said.
[highlight type=”one”]”Michael wants to make Dell the enterprise computing market leader, and a merger with EMC would be the most effective and efficient path to that goal,” said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 232 on the CRN 2015 Solution Provider 500. “Michael is the extreme entrepreneur. He wants to continue to drive and grow Dell. If there is anybody in the world that will be able to pull this acquisition off, integrate it and make it an effective solution for partners and customers, it is Michael.”[/highlight]
The Wall Street Journal reported Wednesday night that Dell is in advanced talks to buy EMC. The report sent Dell shares up 5 percent Thursday, to $27.18. Bloomberg reported Thursday that Dell is speaking to banks about raising at least $40 billion, and could complete the deal as soon as next week.
EMC and Dell would not comment on the reports.
Solution providers say they believe Dell can get the deal done. They said Dell has already shown its enterprise mettle by spending $14 billion over the decade on at least 25 enterprise focused companies in his bid to transform Dell into an enterprise market leader. Among the biggest game changers are his $700 million acquisition of Ethernet switching provider Force 10 Networks in 2011; the nearly $1 billion acquisition of storage virtualization high-flyer Compellent in 2010; and the $1.4 billion acquisition of storage high-flyer Equallogic in 2007.
[highlight type=”one”]”Dell has been on an enterprise acquisition tear,” said Venero. “Every one of their acquisitions has been focused on the enterprise. They are building an arsenal of technologies in support of enterprise-class global accounts. The EMC deal is just going to be an expansion of that enterprise account focus. I look it as one of the top layers of the cake.”[/highlight]
The enterprise offensive has also transformed Dell from a onetime channel antagonist into a channel champion, solution providers said. Five years ago, the Dell business was barely a blip on Future Tech’s balance sheet. Today, Dell is one of the top revenue and profit drivers for Future Tech.
[highlight type=”one”]”Dell’s growth in the channel has been exponential, and it was exponential because of the enterprise support, direction and leadership of Michael Dell,” said Venero, one of the first solution providers to make a big bet on the Dell enterprise solutions march.[/highlight]
Solution providers said they are convinced Dell has the financial wherewithal to work hand in hand with private equity giant SilverLake Management LLC to complete an EMC deal. They said Michael Dell’s ability to pull off one of the largest technology leveraged buyouts in history with SilverLake — a $24.5 billion deal two years ago — is proof that he has the financial savvy to complete an acquisition of EMC.
[highlight type=”one”]I’ve got to believe they can make the math work pretty easily,” said the CEO for an SP500 giant that partners closely with both Dell and EMC. “Dell has a lot of money, They’ve done a good job of paying down debt and they’re ahead of their plan. SilverLake has more money than God. If they want to do this, they’ll make it work.”[/highlight]
[highlight type=”one”]The SP500 CEO is cheering the potential marriage of the two companies as a channel game changer. “There’s enormous value in the combination, and lots of options that could be fun. It would benefit us and both those two companies too,” he said.[/highlight]
[highlight type=”one”]The CEO for a large national SP500 powerhouse, however, said he believes Michael Dell is ready and willing to make a blockbuster acquisition of EMC with private equity participation. “Michael wouldn’t be talking to EMC if he couldn’t get this deal done,” he said.”He is very wealthy and has access to capital that not many people have. He could get two or three private equity firms involved in a deal like this. Michael Dell is one of the smartest guys in the business. He is not going to go looking at a house he can’t afford.”[/highlight]