Oct
13

Five Weird Capital Markets Observations Concerning Dell’s Big Bid for EMC

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The issuance of a lot of fresh debt and the use of tracking stock are just some of the offer’s complications.

Dell is aiming to buy data storage company EMC, for about $67 billion, in what would be the largest technology deal on record. Much of the transaction will be financed through debt, so investors are digesting the details of the proposed deal. Here are some of the more unusual standouts from a capital markets perspective.

1. The huge dependence on debt markets

Dell will add more than $40 billion in debt in order to complete the mooted acquisition, which seems a lot to ask at a time when corporate bond markets have been straining under the burden of new supply—and just two years after Dell went private in a $25 billion leveraged buyout with Silver Lake. Jamie Dimon, chief executive officer of JPMorgan Chase, is said to have showed up at an EMC board meeting around Labor Day to assure the company that Dell would get its financing. That could be considered even weirder because not only were investors reeling from a ton of new issues at the time, but the world was just days away from a Federal Reserve meeting which could have raised interest rates and heaped additional pressure on the corporate bond market…

Five Weird Capital Markets Observations Concerning Dell’s Big Bid for EMC

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