A most successful blind date

The lack of an existing relationship between Intesa Sanpaolo and Dell didn’t stand in the way of the Italian bank clinching $1 billion-worth of the financing when Dell bid for EMC.

Sophy Buckley


There is little more frustrating than watching from the sidelines as history is made.

This was exactly what seemed likely to happen to the technology, media and telecoms (TMT) team at Intesa Sanpaolo when privately-owned computer giant Dell made its $67 billion move on listed storage maker EMC.

“This was the deal of 2016 in the technology space and we wanted to be directly involved,” says Milan-based Marco Lattuada, global head of telecom, media and technology at Intesa Sanpaolo. The bank was not interested in the secondary transactions; it wanted a primary role. The problem was it had no direct relationship with Dell or EMC.

“This was the deal of the year in the technology space and we wanted to be directly involved”

says Milan-based Marco Lattuada, Global Head of Telecom, Media & Technology at Intesa Sanpaolo.

The closest Intesa Sanpaolo had got to Dell was involvement in a swaps deal.

This at least meant that it had studied the company before taking the position, but swaps are far removed from relationship banking and Dell was unaware of Intesa Sanpaolo’s involvement in the derivatives market.

“I was so keen to be directly involved that I asked Bill Denton, my colleague in New York, if he could get to Tom Sweet, Dell’s chief finance officer. But he had no history with the company either.”

This meant making a cold call. But it worked. By the end of October, Lattuada and Denton had flown to Dell’s headquarters in Austin, Texas, and met the CFO for an hour.

“We showed we understood what they were doing, explained our European presence and presented a sound business case for working with us,” says Lattuada. “It was a good meeting and they told us they appreciated the effort we had made. They were putting together their finance consortium but as it was only the first time we’d met they needed to consider everything. They were very measured.”

“We showed we understood what they were doing”
- Marco Lattuada

Undeterred, Denton and Lattuada stayed close to Dell, sending updates on possible courses of action, and in early December 2015 the TMT team got the call.

Keen to make an impression, when Dell revealed the possibility of Intesa Sanpaolo being part of the financing at $400m, Lattuada said he could do more. “We looked at the papers and made an indicative offer of $1 billion,” he says.

“We looked at the papers and made an indicative offer of $1 billion”
Marco Lattuada

The drama didn’t end there. The start of 2016 was a turbulent time on stock markets around the world, affecting the deal that Dell was trying to put together. There was also the further complication of VMware.

EMC had floated VMware, a Cloud solutions unit, in 2007 although it had remained the majority shareholder. When Dell announced its bid for EMC, shares in VMware fell on concerns that it would lose its autonomy and Dell might raid its cash reserves to pay back debt. The solution was to include a $17-billion tracker-share element as part of the offer, giving VMware exposure to shareholders of the merged company.

“It was a way of ring-fencing VMware and bridging a valuation gap,” explains Lattuada. “It’s a sophisticated tool.” There were also two tranches of Term A, one of Term B and a high-grade bridge facility, plus a rolling credit facility. With Dell and EMC’s legacy debt, finance totalled $50 billion.

But market conditions continued to affect the financing and the deal changed several times. In the end, Intesa Sanpaolo was involved in the Term A and Term B loans as well as the bridging finance and rolling credit facility – to a total of $1.08 billion.

“Market conditions continued to affect the financing and the deal changed several times”

“We’d have thought this impossible two years ago,” says Lattuada, alluding to the bank’s growing profile on the international M&A scene. It was involved in the Anheuser-Busch/InBev deal, Altice’s acquisitions of Numericable-SFR and Portugal Telecom, and of KPN by America Movil.

“For us, it’s about building a long-term relationship with Dell. We want to be there for them in lots of markets. We’ve already had a role in the $20-billion bond refinance and we’re hoping to win more business.”

The timing is impeccable. Just as banking is becoming more international, Intesa Sanpaolo is expanding its business globally. In the past four years it has hired experienced investment, leverage and corporate bankers with experience on the world stage. This has helped widen its breadth considerably.

Its success in participating in the primary financing of the Dell/EMC deal has allowed Intesa Sanpaolo to showcase what it can achieve. But ultimately, banking is about trust and fit.

“We do what we say we will. We knew we could do this deal and it came across in our pitch. That builds trust. But we are also a strong European player. That’s good business,” says Lattuada.

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