EMC said it bought Virtustream to add managed cloud services to its business and help customers run mission-critical applications in cloud environments. The deal was announced on May 26, 2015, for approximately $1.2 billion in cash, and closed on July 9, 2015. The purchase price and rationale are historical, not a current acquisition or a measure of whether the strategy ultimately succeeded.
What EMC was buying
Virtustream supplied cloud software and services aimed at large organizations running important enterprise applications. EMC’s announcement named SAP as an example of the workloads Virtustream was designed to support. Its xStream platform managed cloud environments and could also be used by service-provider partners to build services under their own brands.
That combination mattered to EMC because it added a managed-services capability, rather than only more infrastructure or software to sell. In its 2015 annual filing, EMC described Virtustream as part of its cloud strategy and highlighted the xStream platform’s role in delivering cloud services. EMC’s May 26, 2015 announcement and 2015 Form 10-K provide the company’s description.
Why EMC said the acquisition fit its strategy
It wanted a managed cloud-services business
EMC said Virtustream would form its managed cloud services business. The aim was to help customers move applications into cloud-based IT environments, including hybrid arrangements that use private and public cloud resources. EMC framed the acquisition as a way to broaden its existing portfolio into services for workloads that enterprises might not move casually or without specialized management.
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It could combine EMC’s reach with Virtustream’s platform
EMC planned to use its customer and partner relationships to help bring Virtustream’s services to market. The xStream platform also gave service-provider partners a basis for offering branded cloud services. In strategic terms, EMC was seeking both direct delivery and a partner route to market—not simply a software asset.
It intended Virtustream to retain a distinct place in the company
EMC said Virtustream would operate as a separate business within the EMC federation. Virtustream CEO Rodney Rogers was to report to EMC chairman and CEO Joe Tucci. This arrangement suggests EMC intended to preserve the specialist business’s identity while connecting it to EMC’s broader portfolio and distribution; that is an interpretation of the announced structure, not a guarantee about how the business later operated.
What EMC announced it would pay—and what filings later reported
EMC announced an all-cash transaction valued at approximately $1.2 billion. Its filings later reported acquisition consideration net of cash acquired at slightly different rounded amounts:
| Figure | What it represents | Source and date |
|---|---|---|
| Approximately $1.2 billion | Announced all-cash transaction value | EMC announcement, May 26, 2015 |
| $1,219 million | Consideration net of cash acquired reported in the quarter-ended June 30, 2015 Form 10-Q | EMC Form 10-Q, 2015 |
| $1,220 million | Consideration net of cash acquired reported in the 2015 Form 10-K | EMC Form 10-K, 2016 |
The small difference between the filing figures reflects the reported accounting amounts; “about $1.2 billion” is the appropriate shorthand for the announced deal. EMC announced completion on July 9, 2015. See the completion announcement and the second-quarter 2015 Form 10-Q.
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- Product Certification: Fully tested and reset to factory specifications
- Warranty Coverage: Includes one year replacement warranty for your peace of mind
- High Performance Storage: 1.8TB capacity with 10K RPM speed, SAS interface, and 12Gbps data transfer rate for reliable enterprise storage performance
- System Compatibility: Compatible with EMC Unity 300, 400, 500, and 600 series systems with -25 slot disk enclosures
- Enterprise Grade Reliability: Designed for continuous operation in demanding data center environments with consistent performance and durability
What the price and forecasts do not prove
EMC said at announcement that it expected the acquisition to add to revenue and be accretive to earnings per share in 2016. Those were management’s forecasts as of May 26, 2015; the cited announcements and filings do not establish whether those projected effects occurred. Nor do they independently establish that Virtustream was a market leader or validate present-day claims about its products. The documents show EMC’s stated strategic rationale and transaction accounting, not the acquisition’s long-term success.
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