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In 2015, Dell Returned to the Limelight to Snatch EMC. Next Year He Will Need to Explain Why.

The biggest tech deal in history will lumber toward a successful completion in 2016, but expect a few twists before then.

Dell

Like an arm bursting out of the grave, Michael Dell and Silver Lake’s $60 billion proposal to execute the biggest tech deal of all time — the purchase of EMC — surprised just about everyone.

Nobody had heard from the man behind the computer only an IT guy could love since the computer maker’s leveraged buyout. And suddenly, he popped up in October to vow to create the largest diversified tech and IT company on the planet. With annual revenue of more than $80 billion, the new company will span personal computers sold to consumers and businesses to servers and storage gear that are installed in corporate data centers. It will also include control of VMware, a software company controlled by EMC that specializes in virtualization, an important technology that allows computers in data centers to operate more efficiently. It will also be mostly privately held. (More on that in a moment.)

Acquiring EMC will allow Michael Dell and Silver Lake to complete an evolution they began in 2013 when they teamed up to take the original Dell Inc. private in a $25 billion buyout. The plan at the time was to break Dell’s reliance on the declining personal computer business by diversifying into more profitable products like complex data storage equipment. As Dell’s recently disclosed financials show those lofty goals have yet to be met. Dell still relies on sales of PCs for more than two-thirds of its annual revenue. Buying EMC would at a stroke create the company CEO Michael Dell has been wishing for all along.

The Problem Today

The deal Dell and Silver Lake have put before EMC shareholders is a complex one and getting more so by the day. First Dell and Silver Lake have proposed to borrow about $50 billion in order to offer EMC shareholders about $24.05 per share in cash. Second, they have proposed to issue new shares that will track the operations of VMware which would make up the remainder.

There is on paper a lot to like about Dell’s offer. EMC has no other obvious buyers. But shareholders who will ultimately have to vote to accept it have pushed back against some of the deal’s provisions. They seem confused by the proposed tracking stock which analysts have described as impossible to value, and were further annoyed by EMC’s creation of a new joint venture with VMware called Virtustream. The value of VMware shares have fallen by more than a third since the deal was announced.

Meanwhile, Dell has taken to selling off pieces of itself in order to help raise some of the cash it will need to pay off its debt. One asset on the block is Perot Systems, an IT services outfit that Dell hopes will fetch more than $5 billion. Other assets said to be for sale include software divisions such as Quest Software. Dell is aiming to raise as much as $10 billion from sales of assets it no longer considers core to its business. That process will continue through the first half of 2016.

What’s in Store in 2016

There will be a handful of important developments to watch for as the proposed acquisition proceeds toward an anticipated closing next fall. One will be a review by regulators in the U.S., the EU and China. Don’t expect regulators to demand much in the way of changes to the deal. Dell and EMC’s products don’t overlap much, so there’s not much worry about from an antitrust perspective. Any changes they may demand will be minor and Dell will be willing to carry them out.

We’re not expecting much shareholder pushback next year. Without another potential EMC buyer in the mix, it’s hard to imagine a scenario in which the deal is rejected. Dell and Silver Lake will do what’s needed to win over any shareholders.

The one wild card to watch: Elliott Management. The activist hedge fund which owns a 2 percent stake in EMC pushed in 2014 to break up that company. It has strongly supported Dell’s buyout plan, but if that support were in some unlikely scenario to change or waver, things could get messy and fast.

In the end, chances are Dell and Silver Lake will successfully complete this acquisition. How they plans to make the complicated new thing work is a whole other question.

This article originally appeared on Recode.net.

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