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Dell-EMC Merger to be Official Soon, Layoffs in the Offing?

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The biggest tech deal will get officially completed today. Reportedly, Dell Inc is likely to make an announcement of the completion of its takeover of EMC Corp in a conference scheduled in the morning.

However, media reports indicate that major layoffs are in the offing as the merger is anticipated to create “redundant positions”, which need to be eliminated. Reportedly, finance, legal and administrative departments of both the companies will be “pared down.” Analysts estimate 2,000 job cuts that will take place gradually. 

Dell’s $67 billion takeover of EMC Corp made headlines when it was declared in October last year. Per the deal, EMC shareholders will receive $24.05 per share in cash and tracking stock related to a portion of EMC’s economic interest in VMware, Inc. (VMW - Free Report) . Based on EMC’s estimated outstanding shares at the close of transaction, stockholders are likely to get 0.111 shares of new tracking stock for each EMC share.

The newly formed entity named Dell Technologies will begin operations soon after the completion of the merger. Michael Dell, who will become the chairman and CEO of Dell Technologies, had earlier said “this is an historic moment for both Dell and EMC. Combined, we will be exceptionally well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile and security.”

Following the takeover, EMC will be delisted from the New York Stock Exchange, while the new tracking stock will start trading with the ticker ‘DVMT’ on the same day.

EMC currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the tech space include Analog Devices, Inc. (ADI - Free Report) and VeriSign Inc (VRSN - Free Report) . Both carry a Zacks Rank #2 (Buy).

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