In what is expected to be one of the largest tech takeovers ever, Dell is set to wholly acquire enterprise giant EMC on Monday. This follows up a string of otherstorage-relatedacquisitions and purchases as well as others relating to computing as a whole. Dell itself was also taken over not too long ago by founder Michael Dell who took the company private with help from Silver Lake.
Dell managed to regain control of his namesake company back in 2013 with a $25 billion investment. At double that amount, EMC may prove a tough pill to swallow. No one knows the pains of acquiring a company valued over twice of their own than AMD, who suffered massive issues in the wake of their relatively miniscule $5.6 billion takeover of ATI. At double its value, the EMC purchase will rely heavily on bonds, something that may be risky given the current financial situation.
The move to acquire Dell does make a whole lot of sense as firm pivots away from a consumer focus and towards the more lucrative enterprise market. EMC either owns or holds a stake in a wide range of enterprise business with names like VMware, RSA Security, Iomega and Syncplicity. It will be interesting to see how these two tech giants merge and manage their huge portfolio.
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Remember that rumour about AMD getting a major investment from Silver Lake? It turns out now that talks between the two parties have broken down and are going nowhere right now. According to the source, the talks broke down after disagreements on price and strategy could not be resolved. AMD is still looking at other options though in order to bring in some much-needed cash flow tide them over 2016; Silver Lake was rumoured to take over 20% of the firm.
Given the breakdown in talks, it looks like either Silver Lake wanted too much control in return for their cash or the current leadership was unwilling to give up any power. Despite the launch of the new Fury and Nano GPUs, AMD is set for record low revenues and the firm is in serious need of cash. Hopefully, AMD will be able to find an investor till the next generation of GPUs and CPUs kick in.
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Big changes are happening down at AMD with the creation of the new Radeon Technologies Group announced earlier. While such a move will probably pay dividends in the future, it does nothing to solve current issues. In the short-term, AMD looks to be getting a major investor to tide them over till their 2016 products launch. What is interesting is that it’s a private investment firm known for acquiring companies and taking them private.
According to a report, Silver Lake, the same firm that helped Michael Dell take back his company, is set to take a 20% stake in AMD. At this point, it is unknown how Silver Lake will be acquiring those share, with purchases either from other investors, on the open market or from AMD. AMD itself only owns 18.9% of their shares so the new 20% stake will probably come from a variety of sources. If AMD does issue new shares or sell their own shares, that will raise some much-needed cash to boost R&D as well as other expenses.
If Silver Lake does invest in AMD, it will join the likes of Alibaba, Avago, GoDaddy, Motorola Solutions and Opera Solutions as firms which Silver Lake has invested in. With a 20% stake, Silver Lake may get a seat on the board of directors and more restructuring will probably occur as AMD struggles in the face of stiff competition.
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