Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Merger or Acquisition (December 2010)
30 slides from Dell Technologies's merger presentation, Dec 14, 2010
Slide 1: Top Questions
Top Questions Dell Why acquire Compellent? Strategic Relevance? Terms of the acquisition Term fee High premium paid Synergies? Growth or cost? Accretion GAAP Accretion Relationship with EMC Can EMC terminate Does this replace EMC Risks to existing revenue EQL and CML overlap Dell distribution Custom
Slide 2: Why is Dell acquiring Compellent? Why now?
Why is Dell acquiring Compellent? Why now? Enhances Dell's IP and position in mid and high end SAN with leading capabilities in thin provisioning and automated data tiering Compellent's combines industry standard hardware and software IP to optimize data storage and efficiently provision and retriev
Slide 3: Strategic Relevance
Strategic Relevance Dell's scale, size and sales distribution will drive greater deployment and penetration of Compellent's products Compellent's Fluid Data Architecture automates data movement and management to adapt to constant change Single integrated solution for storage, recovery and management
Slide 4: Terms of Acquisition
Terms of Acquisition Dell announced today that Compellent has accepted its offer to acquire the storage leader for $27.75 per share in cash, or approximately $820 million, net of Compellent's cash (equity value of shares is $960M) Compellent provides a leading, virtualized storage platform that is i
Slide 5: Termination Fee
Termination Fee This information will come out to shareholders when Compellent files its documents Reasonable break-up fee, similar to what you have seen in past transactions With respect to PAR, this information was made available when the tender offer was filed 5
Slide 6: Premium Paid
Premium Paid Has industry leading technology and improves Dell's profitability in the large, growing mid range SAN segment The transaction is expected to be accretive to Dell's non-GAAP earnings in FY12 when synergies are considered Compellent grew > 50% over past 3 years Compellent had a 55% gross
Slide 7: Synergies and Expansion
Synergies and Expansion No doubt that growth is the primary focus of this transaction The transaction is accretive to Dell's earnings when synergies are considered Compellent grew > 100% over past 3 years Compellent had a 55% gross margin YTD; consistent with the higher margin storage offerings we h
Slide 8: Accretion
Accretion The transaction is expected to be accretive to Dell's non-GAAP earnings in FY12 when synergies are considered 8
Slide 9: GAAP Accretion
GAAP Accretion Depends on details of purchase accounting In addition, depends on our relationship with EMC We continue to value our partnership with EMC and are in continued discussions with them We will have more details with respect to GAAP upon close 9
Slide 10: Relationship with EMC
Relationship with EMC Our storage solutions offer customer choice, and as such, EMC will continue to be an important part of our storage offerings Dell is delivering open, capable and affordable solutions driven by customer choice EMC remains a trusted partner, a leader in storage and we value our p
Slide 11: Can EMC Terminate Partnership
Can EMC Terminate Partnership We have worked this with EMC leadership and have agreed that we will continue this important relationship. Yes, but there are certain wind-down provisions should they choose to do so EMC remains a trusted partner, a leader in storage and we value our partnership with th
Slide 12: Does Compellent replace EMC
Does Compellent replace EMC We have worked this with EMC leadership and have agreed that we will continue this important relationship We value our commitment to our Dell/EMC customers in supporting their existing environments and expansion needs We will continue to offer fibre channel Dell/EMC stora
Slide 13: Risks to existing revenue
Risks to existing revenue We have a strong partnership with EMC We have worked this with EMC leadership and have agreed that we will continue this important relationship Certain EMC products, especially the CX120, the AX and Data Domain products, are critical to our storage line up. They represent t
Slide 14: EQL and Compellent Overlap
EQL and Compellent Overlap Very minimal overlap between EQL and Compellent EQL is typically a ~50K price point, where Compellent is more $100K and up These two offerings are highly complementary There are technologies with Compellent that can likely be extended to other places in the portfolio 14
Slide 15: Dell sales distribution network?
Dell sales distribution network? Dell's scale, size and sales distribution will drive greater deployment and penetration of Compellent's products EqualLogic has grown from $100M in revenue to $800M runrate in nearly three years, and we expect Compellent will benefit from the same scale and network e
Slide 16: Customer benefits
Customer benefits Compellent's offerings are consistent with Dell and address heterogeneous server farms, virtualization, and many multi-tenant environments Dell's intent is to drive increased efficiency with a goal of reducing data management costs. These savings can help Dell customers make room i
Slide 17: Timing of Close / Integration
Timing of Close / Integration Timing of Close Pending regulatory approval, we anticipate to close the transaction early next year and it will be funded with cash Compellent and Dell will continue to operate as separate companies until the transaction closes Business will continue as usual in order t
Slide 18: Organization & Key Talent Retention
Organization & Key Talent Retention Dell has reached retention agreements with Compellent senior leadership team Compellent team will report into Dell's enterprise product group and respective sales segments At this time, there is no change to the Compellent organization or leadership structure. Com
Slide 19: Compellent's Technology
Compellent's Technology Compellent is a leader in providing automatic, tiered storage for the mid- and high-end SAN market Compellent Fluid Data Architecture automates data movement and management to adapt to constant change Technology Benefits Thin Provisioning Automated data tiering Advanced snaps
Slide 20: Compellent's Sales
Compellent's Sales Compellent has a 100% channel sales model Dell will be able to leverage broader partner network along with breadth of direct relationships Compellent team will report into Dell's enterprise product group and respective sales segments Compellent already has ~2,500 customers at pres
Slide 21: Compellent R&D
Compellent R&D EqualLogic, Exanet, KACE, Scalent and Ocarina all have strong engineering and R&D cultures Compellent will fit nicely in this culture and further expand our ability to develop IP internally 21
Slide 22: Dell acquisition strategy
Dell acquisition strategy We'll complement organic strategy by filling in some gaps with strategic acquisitions that catch a wave of emerging/disruptive technology or those where we can grow revenue synergies. The current acquisition is about putting together Compellent's advantaged technology and D
Slide 23: More storage acquisitions
More storage acquisitions We recognize the world is moving toward unified storage - to this end, we continue to invest, augment and complement a unified storage platform Dell is not hampered by legacy products; Adding IP to deliver solutions customers require (e.g., cloud, iSCSI, Dedupe, thin provis
Slide 24: Overall Dell strategy?
Overall Dell strategy? BVS Strategy: Enterprise innovation and efficiency depends on solutions that are open, capable and affordable. Dell is uniquely open and unconstrained to legacy assets and proprietary approaches to deliver against these needs. The CIO agenda isn't about managing OPEX at the ex
Slide 25: Existing Customers
Existing Customers At this time, customers' relationship with Dell will not change. Customers will continue to work with the same account teams and technical specialists. Our number one priority is to ensure that this transition is smooth for all our customers and Compellent's customers. We will con
Slide 26: Reseller Agreement
Reseller Agreement The purpose of the agreement is to enable, educate and prepare sales teams for the post-transaction relationship Can't offer to Dell resellers until transaction is closed from a legal standpoint Dell has embraced the channel, ~25% of our commercial business is channel driven This
Slide 27: Merger vs. Tender
Merger vs. Tender Standard industry approach that we used in this transaction 27
Slide 28: Why sell to Dell?
Why sell to Dell? Dell brings scale to more broadly distribute and further monetize Compellent's products Successfully integrated and grown EqualLogic revenues from $100M to >$800M runrate business in nearly three years. Success was the result of listening to customer needs, sales training, expandin
Slide 29: Other Suitors / Length of Discussions
Other Suitors / Length of Discussions Were there other suitors for Compellent? We don't discuss M&A discussions publicly. We believe this represents a "win" for our shareholders. 29
Slide 30: Additional Information
Additional Information Important Information In connection with the proposed transaction, Compellent will file a proxy statement with the SEC. Additionally, Compellent and Dell will file other relevant materials in connection with the proposed acquisition of Compellent by Dell pursuant to the terms