Just days after the biggest acquisition in its and the technolgy sector’s history, Dell said it will sell its enterprise content business Open Text, a Canadian maker of business software, for US$1.62 billion.
The agreement is expected to be immediately accretive to earnings, the Waterloo, Ontario-based company said. The deal is seen closing within 90 to 120 days.
Open Text has been spending this year on acquisitions, including buying legacy products from HP.
Barclays acted as a financial adviser to Open Text and provided a US$1bn debt commitment.
The agreement came after Dell Technologies wrapped up the acquisition of EMC, positioning the company to use its size to invest in new areas and fend off competition from the cloud and other rivals.
The deal creates the largest privately held technology group in the world. The combination, valued at about $67bn when it was first announced almost a year, ago creates a $74bn business that serves 98 per cent of Fortune 500 companies, Dell said last week. It also takes EMC out of the glare of the public markets.
The tie-up brings together the leading provider of key storage products and one of the top makers of servers and personal computers as both companies grapple with rising interest in cloud-based services from rivals such as Infor, Amazon.com, Microsoft and Alphabet’s Google. Dell Technologies plans to invest $4.5bn a year in research and development going forward after cumulative investments of more than $12.7bn over the past three years, according to the company.
“We’ve got the ability to innovate at scale and invest – not for next quarter, but we have the agility and speed of a start-up, but the scale and reach of the largest company in the industry,” said Michael Dell, the chairman and chief executive of the company. “Being private gives us an ability to focus on our customers like no other competitor can.”
Dell plans to invest in areas including products linked to the Internet of Things – or the effort to connect various devices, from cars to refrigerators.
“As you have this instrumentation and making everything intelligent – that’s a huge opportunity,” Mr Dell said. “The PC and smartphone revolutions have reduced the cost of microelectronics to the point where these small computers, effectively, can be embedded in anything.”
The new company has 140,000 employees. Dell will cut 2,000 to 3,000 jobs after acquiring EMC, according to people familiar with the company’s plans.
While Mr Dell did not deny there could be job cuts, he said the tie-up was more about revenue growth.
“We have more, what I would call, revenue synergies than cost synergies because of the complementary nature of the businesses; we’re not putting together businesses that are the same – and taking costs out,” he said, declining to give any estimate for lay-offs. “There are some overlapping functions and that sort of thing – that’s not the primary feature of this, but there is some of that.”
EMC shareholders will receive $24.05 per share in cash and a tracking stock linked to a portion of EMC’s economic interest in VMware, its majority-owned software business. Shares of the tracking stock, which has the ticker “DVMT”, began trading on Wednesday.
The merger came a day after Dell Technologies reported its financial results for the quarter ended July 29. Dell said it had revenue of $13.1bn from continuing operations, an increase of 1 per cent from a year earlier. It also had operating income of $63 million, reversing an operating loss in the previous year.
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
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Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
• Steve Cronin, founder of DeadSimpleSaving.com
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
• Zach Holz, who blogs about financial independence at The Happiest Teacher
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
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Stars:Robert Pattinson
Director:Matt Reeves
Rating: 5/5
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
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<html><head><meta http-equiv="Content-Type" content="text/html" charset="UTF-8" /></head><body><!--PSTYLE=* Labels%3aFH Label 18 Sport--><p>Beach soccer</p><!--PSTYLE=BY Byline--><p>Amith Passela</p><p /></body></html>
Directed by: Craig Gillespie
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4/5
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Six things you need to know about UAE Women’s Special Olympics football team
Several girls started playing football at age four
They describe sport as their passion
The girls don’t dwell on their condition
They just say they may need to work a little harder than others
When not in training, they play football with their brothers and sisters
The girls want to inspire others to join the UAE Special Olympics teams
MATCH INFO
Uefa Champions League semi-finals, second leg:
Liverpool (0) v Barcelona (3), Tuesday, 11pm UAE
Game is on BeIN Sports
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Rating: 5/5
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million