"Dell\EMC Intergation Underway, But MOFCOM Looms Large As Potential Obstacle"
Hmmm...
Dell\EMC Intergation Underway, But MOFCOM Looms Large As Potential Obstacle
By Paul AlcornMay 5, 2016 9:45 PM - Source: Toms IT Pro
Tags : Storage
Dell announced its $67 billion EMC acquisition in October, and the integration of the two companies into the new monolithic Dell Technologies started shortly thereafter. During EMC World 2016 in Las Vegas, the company held a press briefing that laid bare its integration progress and roadmap. The company shared an incredible amount of insight into the process, and indicated that only two barriers remain to reaching the full integration in October.
The timeline above indicates the two remaining milestones: additional regulatory approval from MOFCOM (the Chinese regulatory agency) and the special shareholder meeting that will put the acquisition up to an EMC shareholder vote. The increasingly obstructionist MOFCOM committee occupies a large swath on the bottom of the timeline, and if history serves as an example, it could be more of a concern than the company is indicating.
MOFCOM approval is a notoriously difficult hurdle in the regulatory approval race, largely because the agency is often viewed as having its own national interests in mind. It is noteworthy that the Dell/EMC merger has received regulatory approval from a total of 17 agencies around the globe, as listed at the bottom of the chart, but still has not received MOFCOM's blessing.
MOFCOM delayed its decision on the WD/HGST merger for three years, and when it granted approval, it imposed a punishing two year "hold-separate" clause, which requires that WD and HGST maintain separate workforces and products for an additional two years. Unsurprisingly, the MOFCOM blessing came shortly after the announcement of a planned $3.8 billion Unisplendour investment in Western Digital.
Unisplendour is a subsidiary of the Chinese government-controlled Tsinghua Unigroup, and the company's long tentacles are grasping several key technological assets in a bid to further the country's technological prowess. China has been quite vocal about its "Five-Year Plan," which outlines its strategy to develop its own indigenous technology in key sectors, which leads to speculation that MOFCOM's intentions are not exactly altruistic.
Some surmise that the Unisplendour WD investment merely served as a proxy for the country to obtain NAND fabrication technology through WD's $19 billion purchase of SanDisk, which was announced a scant three days after the regulatory approval. The original terms of the SanDisk acquisition even featured two sets of stipulations, with one predicated on the success of the Unisplendour investment. WD also established a joint venture with Unisplendour (which still soldiers on) to market its data center storage systems in China. |
