Dell Says Financing for EMC Deal Is on Track
The executive leading the integration effort brushes off reports that early financing efforts for the $67 billion acquisition are meeting headwinds.Dell officials are pushing back at recent reports that the company is hitting a bump in its efforts to finance its $67 billion acquisition of EMC and its federated companies. In a letter to employees, Rory Read, Dell's chief integration officer and the lead executive in the merger efforts, said the financing for the acquisition is coming together as planned and that officials with Dell and EMC still expect to close the deal sometime between May and October. Read also said that integration efforts are on track for the deal, which is the largest by far in tech industry history. "I want to address some of the chatter over the past few weeks about possible financing headwinds with the transaction," he said in his letter, which also was filed with the Securities and Exchange Commission (SEC). "I can assure you any suggestions our debt financing is in jeopardy are off-target and do not reflect our financing terms and the progress of our financing to date. The debt financing is fully-committed and is being underwritten by many of the leading global banks. The process of syndicating and placing the debt for a transaction of this nature frequently encompasses a time period of several months from start to finish. That process currently is underway and remains on track, as planned." Reports surfaced a week ago saying that a number of challenges—from the complexity of the deal, tighter credit markets and a global slump in stock prices to a stronger dollar and the Chinese New Year—all have conspired to make it more difficult for bankers to raise the money needed for the initial funding of the acquisition. According to terms of the deal, the banks were expected to raise the initial $10 billion by Feb. 10, but the news outlets said that deadline had been pushed back to give them more time to find the money.
Other concerns about the deal have revolved around the falling stock prices of EMC and VMware since the deal was first announced in October 2015. EMC owns about 80 percent of VMware, which is one of the data storage vendor's federated companies. The drop in share price has hurt the tracking stock Dell issued for VMware shareholders to make the deal more attractive to them, and there also is concern among VMware investors that once the deal is done, Dell will grab cash from the virtualization company to pay down the debt.