• by Thom Forbes  @tforbes, October 12, 2015

Dell and data-storage company EMC this morning announced the largest-ever tech deal — a $67-billion takeover of the owner of cloud software maker VMware by the company once known for its personal computers. 

“The deal will be financed through a combination of new equity from Michael Dell, MSD Partners, Silver Lake and Singapore state-owned investor Temasek Holdings as well as the issuance of the tracking stock, new debt and cash on hand,” reports Reuters’ Abhirup Roy and Devika Krishna Kumar.

“We're creating an unbelievable powerhouse of an enterprise company,” Dell chairman and CEO Michael Dell tells CNBC's “Squawk Box,” Tom DiChristopher reports. “This is really all about bringing together complementary technologies and helping our customers address the challenges and opportunities that this digital future is creating.”

Earlier, the New York Times’ Michael de la Merced wrote that the “complicated transaction,” if valued at $65 billion, would be about 27% higher than EMC’s share price when news of the possible deal first emerged last week. Those discussions caught even top Dell executives off guard, Re/code’s Arik Hesseldahl tells us, as  negotiations were conducted directly between CEOs Michael Dell and EMC’s Joe Tucci. 

“The secretive nature of the talks hints at the fact that numerous terms had not been finalized as of late Sunday night. One of those terms, sources said, is a collar intended to protect both parties from movements in the value of EMC shares after the deal is announced,” Hesseldahl writes.

Reuters’ Liana B. Baker, meanwhile, reported EMC wanted “a 'go-shop' provision to be included in the merger agreement that will allow it to solicit bids from other parties and pay a discounted breakup fee to Dell if there is a deal with another company,” according to her sources. “Such a clause, though not unusual in merger agreements, shows how EMC Chief Executive Joseph Tucci is preparing to exhaust all arguments to convince the company's shareholders that a deal with Dell is the best possible outcome for them,” Baker wrote.

“Tucci has in recent years talked about retiring, but had made no clear succession plans. If the Dell deal happens, he won’t have to,” de la Merced wrote, also pointing out that the company has been under pressure from the activist hedge fund Elliott Management to, as a Fortune piece by Jonathan Vanian put it in August, “shake up the way it operates.”

The EMC Federation consists of five independent companies that operate as if they were one. Richard Egan (E) and Roger Marino (M), who were college roommates at Northeastern University, founded EMC in 1979. Its first product was a desk designed for computer users.

“[It] is a direct descendant of the tech companies along Route 128 that revived the Massachusetts economy in the 1960s and 1970s, only to be swamped by the advent of the personal computer,” writes Curt Woodward for the Boston Globe. “Like its predecessors along ‘America’s Technology Highway’ — Digital, Wang Laboratories, Data General — EMC has come under attack by seismic shifts in the computing industry.”

“Much of EMC’s value,” reports the NYT’s de la Merced, “comes from its 80% ownership of VMware, which makes so-called virtualization software, used to make efficient modern computing systems. VMware is worth $34.3 billion, making EMC’s stake worth $27.4 billion. EMC also has 98% of the voting shares in VMware.”

“The deal would combine EMC’s leadership in digital storage with Dell’s share of the market for servers, which businesses use for computing tasks,” reports Bloomberg’s Alex Sherman. “Dell, which was taken private for about $25 billion in 2013, could use the combination to expand its product lineup in high-end data storage equipment and seek to lure customers away from Hewlett-Packard Co. and other rivals.”

“Dell has transformed away from just PCs to offering end-to-end services, and EMC could help them do more of that,” says IDC analyst Bryan Matells Sherman. “The PC business is still critical to them up-selling enterprise services.”

One commenter on Gizmodo’s mash-up of the deal-in-the-making by Jamie Condliffe asks if the EMC deal would “make Dell relevant again.”

“Dell has always been relevant. While you might not own one yourself, go into any place of business and you will most likely see Dells where computers are needed,” responds another. “I can confirm this,” responds a third. “Part of what I do for a living is PC refreshes for corporate environments and it’s been Dell all the way down as far as computers are concerned for quite a while.”

In this case, it’s particularly safe to say that the future is cloudy.