Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Merger or Acquisition (December 2010)
33 slides from Dell Technologies's merger presentation, Dec 13, 2010
Slide 1: Dell to Acquire Compellent
Dell to Acquire Compellent Brad Anderson Phil Soran SVP, Enterprise Product Group, Dell CEO, Compellent Dave Johnson Rob Williams SVP, Corporate Strategy, Dell VP, Investor Relations, Dell December 13, 2010
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 of the merger agre
Slide 3: Key Transaction Facts
Dell and Compellent have entered into a merger agreement under which Dell will acquire Compellent for $27.75 per share in cash Transaction equity value of $960 million and aggregate purchase price of approximately $820 million, net of Compellent's cash The boards of both companies have unanimously a
Slide 4: Compellent at a Glance
Automated, tiered SAN storage Lower capex and opex solution 2009 revenue of $125 million Nearly 2500 customers 250 with more than 100 Terabytes >50% repeat purchasers 100% channel sales model 490 employees Compellent at a Glance Compellent is a leader in modular, scalable SAN storage 4 Integrated ef
Slide 5: Enterprise Ready Solutions
5 Virtual storage Policies bridge physical to virtual Independence from drive type, RAID, speed Less waste when storing data Buy fewer disk drives Save on energy and floor space Advanced data movement engine Set policies and let the system run Optimized data placement Block-level intelligence Manage
Slide 6: Customer Reach
6 Customer Reach Diversified and growing customer base FBI (CHART) ~30% Public ~70% Large Enterprise & SMB
Slide 7: Why Dell and Compellent?
Compellent provides automatic, tiered storage for the SAN market Compellent is aligned with Dell's commitment to open, capable and affordable solutions that reduce TCO Compellent combines industry standard hardware and software to optimize data storage and provision and retrieve data where needed De
Slide 8: Q&A / Important Information
Q&A 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 of the merger agree
Slide 9: Top Questions
Top Questions Dell Why acquire Compellent? Strategic Relevance? Terms of the acquisition High premium paid Synergies? Growth or cost? Accretion GAAP Accretion Relationship with EMC Can EMC terminate Does this replace EMC Risks to existing revenue Dell distribution Customer benefits Deal closing Orga
Slide 10: 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 11: 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 12: 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 13: 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 14: 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 15: Accretion
Accretion The transaction is expected to be accretive to Dell's non-GAAP earnings in FY12 when synergies are considered 7
Slide 16: 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 8
Slide 17: 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 18: 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 19: 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 20: 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 21: 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 22: 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 23: Timing of Close / Integration
Timing of Close / Integration Timing of Close Pending regulatory approval, we anticipate to close the transaction in the first quarter of 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 a
Slide 24: 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 25: 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 26: 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 27: 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 19
Slide 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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. 25 Important Information In connection with the proposed transaction, Compellent will file a proxy statement with the SEC