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Top 5 semiconductor M&As of 2015

Posted: 14 Dec 2015 ?? ?Print Version ?Bookmark and Share

Keywords:M&As? mergers? acquisitions? synergy? consolidation?

1. Dell-EMC

The biggest and probably the one that got the most number of mixed reviews is Dell's $67-billion bid to buy storage giant EMC.

While such a move is expected in an evolving market, one question remains in everybody's mind: Is it a good deal?

Timing is one thing to consider in judging the merits of the pending acquisition. The announcement came as PC sales, the main driver of Dell's revenues, continue to plummet with slow demand among enterprises and consumers.

As mobile devices continue to challenge the PC market, the world's third-largest computer maker intends to use the deal as a way of diversifying its portfolio. By combining its server businesses with EMC's storage and virtualisation expertise, the new company will be able to offer a wider range of products in various applications such as cloud computing, mobility and cyber security, according to a Reuters report.

However, not everyone is convinced that this deal will help spur Dell's growth. For one, an integration as big as this can be "distracting and confusing and can take a lot of time," Steve Herrod, VMware's former CTO, said in a Wall Street Journal report.

Another major roadblock to the Dell-EMC deal is debt. According to CNBC's David Faber, the merger will result in at least $45 billion in additional debt to both companies. EMC's Q2 earnings statement shows that it has more than $5 billion in long-term debt and over $2 billion in short-term commercial paper outstanding.

Dell CEO Michael Dell is aware of these difficulties, but he and Joe Tucci, CEO of EMC, said in a WSJ report that the benefits far outweigh the challenges. Once the deal is completed, Dell will utilise EMC's "converged infrastructure" to sell computing, storage and networking equipment as an "easy-to-install" bundle.

- Stephen Padilla
??With inputs from Julienne Happich, Rick Merritt and Junko Yoshida


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