U.S. Antitrust Regulators Approve Dell's Deal for EMC

The Federal Trade Commission OKs Dell's $67 billion acquisition of the data storage vendor, and European regulators are expected to follow suit.

Dell EMC

Dell's historic $67 billion bid for data storage giant EMC is beginning to get the approvals from antitrust agencies that it needs to move forward.

The companies have received the OK from the U.S. Federal Trade Commission (FTC), and reports last week indicate that antitrust regulators in the European Union are prepared to give unconditional approval to the deal, which by far is the largest in tech industry history and will create a massive company with significant reach in multiple markets.

Officials with EMC announced that the waiting period under the Hard-Scott-Rodino antitrust act expired as Feb. 22 turned into Feb. 23. It was an important regulatory hurdle to cross, and getting the OK from the European Commission would be another one.

"We are very pleased to receive FTC clearance as this takes us a step closer to realizing our vision of creating a global privately controlled technology company," EMC CEO Joe Tucci said in a statement. "Together, our investments in R&D, focus on innovation and world-class sales and service will enable our customers to accelerate their journey to hybrid cloud and digital transformation."

Dell CEO Michael Dell said in a statement that with the FTC approval, "we have taken another step on our path to becoming a combined company. Our teams are engaged in integration planning and all transaction-related workstreams are on track."

The approval from European regulators could come as early as Feb. 29, according to a report last week by Reuters. Citing unnamed sources, the news site said the commission was ready to give its approval unconditionally. A spokesman for the European Commission declined to comment, and a Dell spokesman told Reuters that "the transaction is on schedule under its original timetable and original terms."

Michael Dell and Joe Tucci announced the deal in October 2015, saying the merged company would enable Dell to better compete with rivals like Hewlett Packard Enterprise (HPE), IBM and Cisco Systems in the enterprise IT solutions and services space, particularly in such growing markets as cloud computing, mobile computing, security, hyperscale computing and the Internet of things (IoT).

Since returning to the helm of his namesake company, Michael Dell has been working to transform Dell from a PC box maker to a player in the enterprise IT space. That has included spending billions to buy companies in areas ranging from data storage and networking to cloud computing, security and software.

In 2013, Michael Dell won a protracted struggle with some shareholders to take the company private in a $25 billion buyout. The acquisition of EMC and its various federated companies—including VMware, Pivotal, RSA, VCE and Virtustream—further pushes forward Michael Dell's ambitions.

In the months since the deal was unveiled, much of the focus has been on the impact the announcement has had on the stock prices of EMC and VMware, and on the debt Dell will incur once the acquisition is complete. Both EMC and VMware have seen share prices fall, which—particularly in the case of VMware—could prove to be a headache for Dell. The company has issued "tracking shares" for VMware investors designed to make the deal more attractive to them, but the fall in VMware's stock has impacted the value of those shares.

In addition, Dell could take on as much as $49 billion in debt from the deal, though the company is making moves to reduce that debt, including shopping around some assets, such as SonicWall, Quest Software and Perot Systems.

There were reports earlier this month that Dell was having difficulty raising some of the money needed to finance the deal. However, Michael Dell and other company executives have pushed back at the reports, saying the financing for the deal is coming together as expected.

"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," Rory Read, Dell's chief integration officer and the lead executive in the merger efforts, wrote in a letter to employees. "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."