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EMC sale clears last hurdle, Dell to close on purchase next week

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When the sale closes, the combined company, Dell Technologies Inc., will keep its enterprise computing division in EMC’s hometown of Hopkinton.
When the sale closes, the combined company, Dell Technologies Inc., will keep its enterprise computing division in EMC’s hometown of Hopkinton.Steven Senne

Dell Inc. has received approval from regulators in China for its $65 billion purchase of EMC Corp. and plans to close the buyout of the largest technology company in Massachusetts on Sept. 7, the companies said Tuesday.

The sale of EMC ends a storied era in the state's high-tech sector. The new company, called Dell Technologies Inc., will instantly become one of the industry's largest suppliers of big-business computing equipment.

The sale, first proposed last October, had been viewed for months as a formality despite some early skepticism from investors. Regulators in the US and Europe approved the transaction months ago, and EMC shareholders overwhelmingly voted for the acquisition in July.

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"I am proud of everything we've built at EMC — from humble beginnings as a Boston-based startup to a global, world-class technology company with an unyielding dedication to our customers," EMC chief executive Joe Tucci said in a statement.

The newly combined company will keep its enterprise computing division in EMC's hometown of Hopkinton, headed by EMC executive David Goulden.

Another Massachusetts-based EMC executive, Howard Elias, is expected to lead the company's global services and IT division.

But the sale has caused jitters across Massachusetts because it ends decades of independent ownership for the state's flagship tech company. EMC employs about 53,000 worldwide, with more than 9,000 in Massachusetts.

Founded in 1979, EMC began as a supplier of digital memory equipment for other companies' computers. It eventually became the top seller of data-storage equipment, refrigerator-sized cabinets of computer disks that hold the digital information flowing through corporate and government data centers.

"It's rare that companies get big enough and important enough, as EMC did, to kind of dominate the landscape," said former EMC executive Mark Fredrickson, a managing director at marketing agency CTP.

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But improvements in computer hardware and the rise of "cloud" computing, which uses sophisticated software to make data processing more efficient, have shrunk EMC's core business.

The company's sales only grew by 1 percent in 2015, to about $24.7 billion. Its profit fared worse, sinking to less than $2 billion in 2015, from $2.7 billion the year before.

The Dell takeover could give both companies a shot at increasing sales, in large part because each specializes in something the other doesn't have — EMC's strength in data storage, along with a huge corporate sales force, combined with Dell's wider array of servers and PCs for business.

Together, the two companies say their annual sales could reach $74 billion.

But analysts have pointed out that the combined company's sheer size could make it difficult for executives to quickly shift strategy and product lineups in response to a fast-moving technology market.

Dell raised about $50 billion in debt financing to pay for the deal. EMC shareholders will receive $24.05 for each share of stock and shares of a separate tracking stock meant to reflect the value of EMC's nearly 80 percent ownership of VMware Inc., a publicly traded seller of data center software.

Dell was publicly traded until 2013, when founder Michael Dell partnered with private equity investors to buy his namesake company for nearly $25 billion. Headquartered near Austin, Texas, Dell has more than 100,000 employees around the world.

Longtime EMC chief executive Tucci will retire as part of the sale to Dell. He is expected to collect nearly $24 million in cash and stock for successfully selling the company, according to regulatory filings.

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Curt Woodward can be reached at curt.woodward@globe.com. Follow him on Twitter @curtwoodward.