Dell's Acquisition of EMC Gets OK From European Regulators

The European Commission found that the merged company would face plenty of competition in the data storage and virtualization markets.

Dell EMC

Dell's $67 billion bid to buy data storage giant EMC took a significant step forward when European antitrust regulators gave their unconditional approval to the massive deal, a move that came a week after a similar decision by counterparts in the United States.

The European Commission, the antitrust arm of the European Union (EU), announced its decision Feb. 29, saying that the combination of Dell and EMC would not significantly hinder competition in such areas as data storage, virtualization and servers.

In each of those markets, regulators found that the merged company would continue to face strong competition, and noted that in the case of VMware, the virtualization technology vendor has a history of working with multiple vendors, including competitors of Dell. EMC owns about 80 percent of VMware, which is one of several companies within EMC's federation of businesses that Dell will inherit when the deal closes later this year.

In a statement, Margrethe Vestager, head of the commission's competition policy, said she was pleased that regulators were able to render a decision in a short amount of time, particularly "given the strategic importance of the data storage sector." The commission worked closely with the U.S. Federal Trade Commission during its investigation, officials said.

Dell CEO Michael Dell and EMC CEO Joe Tucci announced the deal—which is the largest in tech industry history—in October 2015. Since returning to the CEO position at his namesake company in 2007, Michael Dell has pushed to transition the vendor from being a PC box maker to becoming a full-fledged enterprise IT solutions and services company that has its hands in everything from servers, networking and storage to virtualization, security, software and the cloud. The company has spent billions of dollars acquiring companies to build up its product portfolios.

Bringing EMC into the fold will enable Dell to better compete with such companies as IBM, Hewlett Packard Enterprise (HPE) and Cisco Systems, and will give Dell a presence in every facet of enterprises and service providers, from the devices at the edge of the network to the data center and into the cloud, officials have said. That includes PCs.

The acquisition in recent months has garnered a lot of attention around the financial aspects of the deal, including the amount of debt Dell will take on—as much as $49 billion—whether financing it will be difficult, and the impact of the proposal on EMC and VMware stock, both of which have seen their share prices slide over the past several months.

However, officials with both Dell and EMC have pushed back at reported concerns about challenges Dell may face in finding the financing for the merger, saying that financing is proceeding as expected and that the deal is still expected to close by October without any delays or changes in the negotiated terms.

EMC shareholders are expected to vote on the matter in the spring. The swift approvals of regulators in the United States and Europe will help keep the deal on track.

Regarding the storage market, the European Commission found that a merged Dell-EMC will have "moderate market share" and that the "increment brought about by the merger is small," regulators said in a statement. The organization also determined that a combined company will continue to see strong competition from the likes of HPE, IBM, NetApp and Hitachi, as well as smaller vendors.