Dell is buying EMC Corp. The deal, valued at $67 billion, is double the record $33.4 billion Compaq-HP deal in 2001.
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Dell reportedly is weighing strategic alternatives, including a potential stock offering, as the manufacturer of computers and data storage equipment seeks to spur growth and raise cash.
Options in the early-stage discussions by executives of the privately held technology firm include a possible purchase of the remainder of VMware, a cloud infrastructure company that’s a Dell partner, The Wall Street Journal and Bloomberg News reported, citing unidentified people familiar with the issue.
Dave Farmer, a spokesman for the Round Rock, Texas-based company, in a Friday email said, “Dell does not comment on rumor or speculation.”
Michael Dell took the company private in a 2013 leveraged buyout that gave the company founder and investment firm Silver Lake corporate control of the technology giant.
Two years later, the company acquired data storage provider EMC for roughly $67 billion, a $33.15-a-share deal that represented the largest takeover in technology industry history.
Last September, the company said it had second-quarter revenue of $19.3 billion, up 48% from a year earlier. However, Dell also posted a $1 billion operating loss from non-cash expenses run up from its leveraged buyout and the EMC acquisition.
At that time, Michael Dell told USA TODAY the company was “innovating like a start-up with the scale and reach of a global technology powerhouse,” fulfilling his vision of pushing the tech giant into cloud computing, artificial intelligence and other cutting-edge developments.
If Dell opted for an initial public offering, the move would represent one of the largest stock offerings in recent years. Cash raised by an IPO would enable Dell to pay down the company’s debt load and invest in the business.
The company’s reported discussions could be driven in part by the sweeping federal tax overhaul enacted by Congress and the Trump administration in December.
The Dell XPS 15 base model isn’t anything special, but the flagship version? Now, that you have to check out.
The changes cap company deductions of interest expenses from their taxes at 30% of earnings before interest, taxes, depreciation and amortization. Given Dell’s corporate debt, the new tax law could inflict a sizable financial hit.
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc
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