EMC's decision to buy DGN for $1B puzzles me. They claim it will help them compete in the mid-range market (where NTAP plays), but I don't see how.
Anyone have any insight into this? On the surface it seems like a very unwise move by EMC, but there must be more below the surface.
Clarion is such a mediocre product. EMC could have done better by building a product for $1B of R&D,imo.
EMC TO ACQUIRE DATA GENERAL
Accretive Transaction Will Enable EMC to Penetrate New Storage Markets
HOPKINTON, Mass. - August 9, 1999 - EMC Corporation (NYSE:EMC), the world's
leading provider of enterprise storage systems, software, and services, and
Data General Corporation (NYSE:DGN) today announced that they have entered
into a definitive agreement for the acquisition of Data General by EMC.
Under the terms of the agreement, EMC will issue 0.3262 of a share of EMC
common stock for each share of Data General common stock, subject to certain
adjustments. Based upon the August 6, 1999, closing price of EMC common
stock, the transaction is valued at approximately $19.58 per Data General
share, for a total consideration of approximately $1.1 billion. Completion
of the transaction is subject to approval of Data General stockholders and
appropriate regulatory review, and is expected to occur before the end of
1999. EMC expects the acquisition to be accretive to its fiscal year 2000
earnings and significantly accretive to fiscal year 2001 earnings.
This acquisition will enable EMC to address customer requirements in the
rapidly growing midrange storage market, an approximately $10 billion market
in 1998. Data General's CLARiiON storage products are recognized as among
the most advanced midrange storage systems in the world. When combined with
EMC's industry-leading software, distribution and services capabilities,
these products will emerge as the world's most advanced midrange storage
solutions and enable EMC to fully address all of its customers' online
storage needs in both new and existing markets.
Data General's AViiON server business will operate as a separate unit of
EMC, with continued focus on the NUMA (non-uniform memory access)
architecture, enterprise Windows NT, and serving the computing needs of the
worldwide health care market. EMC also plans to leverage Data General's core
research and development expertise in Intel-based processor systems and
high-performance operating systems across EMC's existing range of products.
These technologies also will be highly valuable in developing
network-attached storage solutions for the future.
Michael C. Ruettgers, EMC President and CEO, said, "This acquisition
delivers on our long-stated objective of constantly expanding our market
opportunities. Data General's products have proven technology leadership in
the midrange storage market, particularly in the Windows NT and UNIX
environments, but have lacked the global distribution and support needed to
achieve their full market potential. We believe they will provide an
excellent complement to our high-end Symmetrix Enterprise Storage family and
will enable us to serve this growing market segment."
Ronald L. Skates, Data General President and CEO, said, "As a technology and
market leader with an unmatched track record of execution, EMC is the ideal
company to continue the hard work and innovation of Data General into the
next millennium. We look forward to the opportunity for our technologies
and our people to thrive as part of EMC."
EMC's Ruettgers continued, "This acquisition also represents the union of
two of the largest Massachusetts-based technology companies, Data General
with its origins in the early years of the computer industry and EMC at the
forefront of the current explosion in demand for intelligent storage. The
fact that we are neighbors, with headquarters just a few miles apart, gives
us even greater confidence in our ability to maximize synergies and achieve
the most efficient integration possible."
The transaction is intended to qualify as a pooling-of-interests for
accounting purposes and as a tax-free exchange of shares under IRS
regulations.
Data General, based in Westboro, Massachusetts, is a major supplier of
storage and enterprise computing solutions for customers worldwide. The
company's products include CLARiiON Fibre Channel storage systems, high-end
Windows NT and UNIX AViiON servers, and related software and services. The
company reported fiscal 1998 revenues of $1.5 billion. Additional
information on the company, its products, and services is available on the
Internet at www.dg.com.
EMC Corporation, based in Hopkinton, Massachusetts, is the world's
technology and market leader in the rapidly growing market for intelligent
enterprise storage systems, software, networks and services. EMC's products
store, retrieve, manage, protect and share information from all major
computing environments, including UNIX, Windows NT and mainframe platforms.
EMC has offices worldwide, trades on the New York Stock Exchange under the
symbol EMC, and is a component of the S&P 500 Index. For further
information about EMC and its storage solutions, EMC's corporate web site
can be accessed at emc.com.
This release contains "forward-looking statements" as defined under the
Federal Securities Laws. Actual results could differ materially from those
projected in the forward-looking statements as a result of certain risk
factors, including but not limited to: (i) the operational integration
associated with acquisitions; (ii) delays in the development, production or
acceptance of either company's products; (iii) the transition to new
products; (iv) competitive factors, including but not limited to pricing
pressures, in the computer storage market; (v) the relative and varying
rates of product price and component cost declines; (vi) other risks
associated with acquisitions; and (vii) other one-time events and other
important factors disclosed previously and from time to time in EMC's
filings with the U.S. Securities and Exchange Commission.
Claire G. Wells
Program Coordinator
EMC Global Public Relations
wells_claire@emc.com
(508)435-1000 x77109 |
