NEW YORK -- Dell Inc. is buying data storage company EMC Corp. in a deal valued at approximately $67 billion, a move that will transform the computer company into a major player in the data storage market.
The acquisition shifts the focus at Dell, once a pioneer in the personal-computer business, away from hardware to the more profitable areas of data storage and other business services.
And it shows how two mature companies are trying to adapt to the quickly changing market.
Since going private in 2013, Dell Inc. has been investing in research and development and expanding its software and services business as those in the technology industry continue to struggle with soft personal-computer sales.
EMC meanwhile has been shifting from providing data storage hardware such as on-premises data centers to offering a more comprehensive suite of information technology products to businesses, from cloud storage to security offerings.
"Our new company 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," Michael Dell said in a written statement.
Dell will serve as chairman and chief executive officer of the combined company. Joe Tucci, chairman and CEO of EMC, will remain in those roles until the deal is complete.
Analyst Daniel Ives of investment banker FBR Capital Markets & Co. said the deal means Dell is "no longer your grandma's PC company."
"It's a landmark, historic deal that really brings them into the enterprise market and makes them a behemoth," Ives said.
The deal had been rumored for weeks. EMC also has an 80 percent stake in cloud-computing company VMware Inc., which will stay an independent, publicly traded company.
As part of the $67 billion agreement, Dell will also contribute about $3 billion in equity, and Silver Lake Management, a co-owner, a co-owner of Dell Inc., will put in about $1 billion, said the people, who asked not to be identified because the information is private.
Private-equity firm Silver Lake was part of a failed attempt in 2007 to buy Acxiom Corp. of Little Rock for $3 billion.
The financing will be a combination of new debt and refinanced existing debt, one of the people said.
Banks including JPMorgan Chase were approached about financing the deal, people familiar with the matter said last week. Jamie Dimon, JPMorgan's chairman and chief executive officer, showed up at an EMC board meeting around Labor Day to assure the company that Dell would get the financing it needed to complete an acquisition, according to a person with knowledge of the matter.
"From EMC's perspective, this is a great deal. They couldn't have worked it out better," said Rajesh Ghai, an analyst at Macquarie Group Ltd. "Eventually, big customers are going to want to buy from fewer suppliers, and if you have everything under the same roof, you have a better chance."
EMC has been facing tough competition in the storage sector as companies including Amazon, Microsoft and IBM have stepped up cloud-storage offerings.
Analyst Glenn O'Donnell of technology and marketing research company Forrester Research said the deal is good news for EMC and its customers.
"Speculation has been somewhat scary for them, but Dell is a trusted player and a low-risk 'soft landing' for these customers," he said. It's a good move for Dell, too, he added.
"Dell is fairly weak on storage, and EMC will help give it a full portfolio that it needs to compete with [Hewlett-Packard], Cisco, IBM, and the growing threat from Huawei," he said.
Shareholders of EMC Corp. will receive about $33.15 per share, which includes cash plus tracking stock linked to part of EMC's economic interest in the VMware business. That's a 19 percent premium to EMC's Friday closing price of $27.86.
Dell Inc.'s headquarters will remain in Round Rock, Texas. The combined enterprise systems business headquarters will be in Hopkinton, Mass., where EMC is based.
The deal, which was approved by EMC's board, is targeted to close in the second or third quarter of Dell's fiscal year ending Feb. 3, 2017. It still needs approval from EMC shareholders.
Dell, started by Michael Dell in 1984 when he was a teenager, went on to change the personal-computer business with low costs, customized orders and direct sales first over the phone and later the Internet.
EMC shares rose 49 cents, or 1.8 percent, to close Monday at $28.35 after rising as high as $28.77 earlier in the day.
Information for this article was contributed by Mae Angerson of The Associated Press and by Alex Sherman, Brian Womack and Dina Bass of Bloomberg news.
A Section on 10/13/2015