Dell Inc. and EMC Corp. announced on October 12 that they have signed a definitive agreement under which Dell, together with its owners, Michael S. Dell, founder, chairman and CEO of Dell, MSD Partners and Silver Lake, will acquire EMC.

Under terms of the agreement, EMC shareholders will receive $24.05 per share in cash in addition to tracking stock that is linked to a portion of EMC’s stake in the VMware business. The deal is valued at around $67 billion, according to a press release.

Michael Dell will lead the combined company as chairman and CEO.

Craig Stice, Computer and Server Electronics Analyst for IHS, says that together as one entity, Dell and EMC will have "one of the most complete and unified portfolios, which should provide them additional reach into larger business opportunities they may have not had access to as individual companies." He says the combination should allow the companies to better compete against the likes of IBM, HP and Cisco in the growing trend of unified IT solutions.

Stice says that the deal appears to be the best path for both companies. "Financial success of course is still a question mark," he says. Both companies are considerable in size, and both already have extensive product portfolios. Integrating these portfolios will likely require change and some amount of scaling back in any doubling of efforts.

"IHS doesn’t believe initially this will drive divesting in lower margin server or PC business from Dell, but if down the road and financially the low margin business becomes too much of a burden, then it is possible," Stice says.

The combination of Dell and EMC will create one of the world’s largest privately-controlled, integrated technology companies. The company will operate in the information technology market with complementary product portfolios, sales teams and R&D investment strategies. The companies have leadership positions in servers, storage, virtualization and PCs. A news release says the deal and it brings together "strong capabilities in the fastest growing areas of the industry, including digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and security."

VMware will remain a publicly traded company and continue to provide software-defined data center technology, together with cloud, mobile and desktop offerings.

The deal is expected to be financed through a combination of new common equity from Michael Dell, MSD Partners, Silver Lake and Temasek, the issuance of tracking stock, as well as new debt financing and cash on hand. There are no financing conditions to the closing of the transaction.

Michael Dell and related stockholders will own around 70% of the company’s common equity, excluding the tracking stock, similar to their pre-transaction ownership, a statement says.

Following completion of the transaction, Mr. Dell will lead the combined company as chairman and CEO.

The transaction is expected to close in the second or third quarter of Dell’s fiscal year ending Feb. 3, 2017 (within the months of May to October 2016).

"Being a private company under Dell does allow them greater flexibility as they won’t have to disclose or answer to shareholders," says Stice. "But the bigger the ship becomes, the harder it is to turn."