EMC to buy DG for $US1.1bn

EMC to buy DG for $US1.1bn

Storage systems, software and services vendor EMC announced last week it will buy Data General for about $US1.1 billion in a deal aimed at gaining a greater share of the midrange storage market.

EMC will issue 0.3262 of a share of EMC common stock for each share of Data General common stock. Based on the August 6 market closing price of company shares, the transaction totals about $19.58 per share of Data General, which is based in Massachusetts, and whose flagship Clariion line targets midrange storage systems.

"We believe that this allows us to increase the target market as much as 40 per cent," EMC president and chief executive officer Mike Ruettgers said at a press conference last week.

The deal is the result of EMC's customers complaining that they have midrange storage needs that are not being met, he said. Internet companies need to be able to rapidly scale storage systems that are always up.

EMC has also heard that customers need storage systems that connect homogeneously, Ruettgers said, adding that after looking around at companies EMC could acquire, it was decided that Data General's Clariion line would offer customers what they most want.

Globally, EMC has 12,000 employees. The company is looking to hire 1500 more people, most of them at the Massachusetts headquarters, Ruettgers said. Data General has some 5000 employees globally. The headquarters of both offices are within 10 kilometres of each other. Corporate headquarters will remain at the EMC site, Ruettgers said.

Dan O'Hara, Data General's Australian managing director, told ARN's sister publication Computerworld the deal is expected to have little impact locally as the two companies have little overlap.

Most employees apparently will keep their jobs, although Ruettgers said that since he expects there will be cross-over in job responsibilities, some positions will be eliminated. However, he added, "I don't think it will be significant." Data General has a slightly older workforce and so some employees there will probably opt to retire, he said.

One job that seems up in the air is that of Ron Skates, Data General president and CEO, who said that his main role in the coming months will be to help make the transition smooth. Beyond that, he said he can't say what he'll be doing.

The merger is likely to be positive for EMC and Data General customers, an IDC analyst commented.

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