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By | Iain Thomson 12th February 2016 01:04

Dell 'struggling to raise funds for EMC gobble'

A falling tech market sinks all boats

Dell's US$67bn mega-merger with EMC could be in trouble, with bankers reportedly having trouble raising the funds to foot the acquisition.

The takeover, which was announced in October, looked like plain sailing, but the falling stock market, and in particular the crash in tech stock prices, appears to have had a knock-on effect: Dell has, we're told, hit a fundraising snag.

The New York Post reports that the banking consortium, led by JP Morgan, that was supposed to have nailed the first $10bn on Wednesday, has asked for a 10-day extension after struggling to price and sell the necessary bonds to the credit markets. This is according to an anonymous source.

It is suggested that Dell is also having problems selling Perot Systems. Dell had been asking around $5bn for the firm, which would help its finances considerably.

Atos had been the front runner to buy Perot but has pulled out of the bidding, citing stock price worries. NTT Data and Tata are apparently still in the bidding to take over Perot Systems.

The stock market has also caused problems with the terms of the EMC takeover deal. Shareholders in the company were due to get $24.05 per share in cash and a tracking stock tied to the value of VMware. That was when stock in VMware was worth $69 per share – it's currently at $43 and trending downwards.

If the deal doesn't go ahead, there's going to be a hefty bill to pay. Under the terms of the deal, Dell has to pay EMC $4bn in compensation if the buyout falls through, and that's going to wipe the smile off Michael Dell's face for a long time.

"The EMC transaction is on schedule under the original timetable and the original terms," a Dell spokesman told The Post. There has been no response to requests for information from El Reg. ®

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