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Dell to Acquire RSA Parent Company EMC for $67 Billion

Dell announced Monday they will be acquiring enterprise software, storage and security firm EMC in what will be the largest tech merger of all time at $67 billion. While the companies were competitors in the enterprise data server industry, EMC is also a major player in the risk space as the parent company of RSA, known for their SecurID two-factor authentication along with other risk detection and behavioral analysis solutions.

While Dell may be best known for their PC business they also offer enterprise data storage and security services. The acquisition of EMC will immediately bolster their place in this industry and will make the combined companies the third largest enterprise technology provider, behind only Hewlett-Packard and IBM in terms of revenue.

The Dell company was taken back under private ownership two years ago in a $25 billion buyout by CEO and Founder Michael Dell, along with the financial backing of Silver Lake. Under the preliminary terms of the acquisition, Dell Inc. will purchase all shares of EMC at an approximate 25 percent premium, just over $33 per share, which works out to about $67 billion. EMC additionally owns an 81 percent share of the company VMware, which will remain publicly traded. The multi-billion dollar acquisition is being financed by Michael Dell, Silver Lake and new debt financing, while the company plans to spend the next two years following the closing of the deal focused on reducing this debt. If all goes as planned, the acquisition will be finalized between May and October 2016.

While EMC is on the selling end of this transaction they have been buyers many times before. They entered the risk and access management space with the acquisition of RSA in 2006 for $2.1 billion and made other notable acquisitions with the purchase of Authentica, Verid and others. EMC/RSA since grew their presence and suite of services for risk management with the acquisition of behavioral monitoring firm Silver Tail Systems in 2012.

The strategic focus of this acquisition seems to be more focused on the enterprise storage and software aspect of the business. Only time will tell what that means for the security division RSA, whether that is spun off or remains under the Dell/EMC umbrella. Hewlett-Packard is splitting up their consumer PC and enterprise IT solutions businesses, while Dell operates in both of these markets as well, and will soon several assets in the risk and security industry as well.

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