EMC reveals Dell merger details

EMC explained the business structure it will follow after the merger with Dell is complete.

In a detailed document, EMC stated that after the deal is closed, the new company will focus on three segments: enterprise, commercial, and consumer and small business. The final decision is scheduled to happen between May and October 2016. The new company expects to create a business with approximately US$80 billion (A$104 billion) in revenue.

There are no plans of site closure despite discussions of Dell keeping EMC's Hopkinton, Massachusetts, location, which will serve as the combined company's headquarter for enterprise systems business. In the middle of 2015, EMC announced the closure of 80 South Street in Hopkinton – three minutes away from the company's headquarter – and has been relocating staff to other facilities.

Both companies operate their businesses separately until the transaction is complete. A full integration is expected to take two years, with some things being implemented at the close of the deal and others by the end of Dell's 2017 fiscal year.

So far, there has been no announcement regarding partner programs. EMC mentioned that a planning process is in place and decisions will be communicated in the coming months.

The channel can expect: "the commitment to partners and programs, R&D investment; including the enhancement of products and roadmaps in place, dedication to customer choice, continue enhancement of partnerships and technology ecosystems and clear communication following customer feedback," according to the storage vendor.

The new company will have more freedom to invest in innovation despite concerns of Dell recently investing very little in R&D. "After Dell was taken private, Dell’s R&D investment increased", stated the document.

EMC subsidiaries

EMC expects that Dell and RSA combined will create a "top five security player across SMB and enterprise customers". The relationship with Dell will increase converged infrastructure opportunities for VCE converged platforms. The relationship between VCE and Cisco should not be affected, according to EMC.

After the merger is completed, there will be three "strategically aligned" business: VMware, Pivotal and SecureWorks. VMware will continue to operate as a public-traded company and Pivotal as a startup with the prospect of becoming a public company.

There is a business opportunity in VMware's software-defined data centre layered on top of Dell and EMC's converged infrastructures, according to the document. This can be offered as a service through Virtustream, a joint venture of EMC and VMware. The service could also be delivered through Pivotal's application development platform. "Security assets from Dell and RSA enable us to further extend our ‘trust’ value proposition to the customer – critical in cloud environments."

Merger details

The merger is on schedule and a meeting of EMC shareholders is expected by the end of May. Antitrust clearance has been provided by the United States, the European Union, Australia, Canada, Israel, Japan, South Africa, Switzerland and Turkey. Still to be expected is approval from jurisdictions including Brazil, China, India, Mexico, Russia, South Korea and Taiwan.

Denali, Dell's parent company, said that the merged company will work on reducing its aggregate debt during the first 18 to 24 months after the completion of the merger.

"Going private is expected to eliminate approximately US$3.5 billion (A$4.6 billion) of stock repurchases and dividends EMC has averaged annually over the last three years. These savings are greater than the outlay to service Dell’s debt, creating more opportunity to invest in the business rather than less," stated the document.

Each share of EMC common stock will be exchanged for US$24.05 in cash and approximately 0.111 shares of the tracking stock.

The document containing 125 frequently asked questions was filed with the US Security and Exchange Commission (SEC) on 30 March and also addressed major employees concerns.