Dell Faces $60 Billion in Total Debt With EMC Deal

Dell Buys EMC for $67 Billion: What's Next?
  • PC maker said planning to add almost $50 billion debt for EMC
  • Dell, Silver Lake said to put in about $4 billion new equity

Dell Inc. will add almost $50 billion in debt to complete its proposed acquisition of EMC Corp., the largest technology acquisition ever, bringing the closely held company’s total debt to about $60 billion, people with knowledge of the matter said.

As part of the $67 billion agreement announced Monday, Dell will also contribute about $3 billion in equity and Silver Lake Management, a co-owner, will put in about $1 billion, said the people, who asked not to be identified because the information is private.

The financing will be a combination of new debt and refinanced existing debt, one of the people said. It’s expected to be a mix of investment grade and speculative grade, another person said.

Jim Hahn, a spokesman for Dell, declined to comment.

Banks including JPMorgan Chase & Co. were approached about financing the deal, people familiar with the matter said last week. Jamie Dimon, JPMorgan’s chairman and chief executive officer, showed up at an EMC board meeting around Labor Day to assure the company that Dell would get the financing it needed to complete an acquisition, according to a person with knowledge of the matter.

VMware Stock

Dell, which went private a couple of years ago in a $25 billion buyout with Silver Lake, plans to pay $24.05 a share in cash plus tracking stock in EMC’s VMware Inc., its prize holding. The deal will combine EMC’s dominance in devices that store data with Dell’s No.2 position in servers, the powerful machines that help companies handle computing challenges.

The combined company will be run by Michael Dell, the chief executive officer of the company he founded. The deal is being funded by him, his MSD Partners investment vehicle, Silver Lake and Singapore state-owned investment company Temasek Holdings, as well as debt financing, the VMware tracking stock and cash on hand.

EMC, which has been publicly traded since 1986, had been looking at strategic options for boosting its share price. Activist investor Elliott Management Corp. pushed the company to spin off software-maker VMware and pursue strategic alternatives for the remaining businesses.

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