Technology firm Dell is in talks to buy data storage company EMC, a person familiar with the matter said, in what could be one of the biggest technology deals to date.
According to CNBC, Dell would make an offer of more than $27 per share for EMC. CNBC, citing sources, said the Dell-EMC deal would need $40 billion in financing and could be a week away. Under the deal, Dell could keep control of EMC’s majority-owned virtualisation software maker VMware.
EMC has been under pressure from activist investor Elliott Management to spin off VMware, saying EMC’s structure of combining several businesses obscures “enormous” value.
Elliott agreed in January to refrain from agitating against EMC for eight months in exchange for two directors backed by Elliott. Reuters reported last week that Elliott plans to give
EMC most of October to respond to its demands after the standstill agreement expired, hoping the extra time would give
EMC more room to craft a response to avoid an activist campaign. “Of all the options potentially on the table, we would view a merger with the now-private Dell as a nightmare scenario that would lack strategic synergies and further complicate
EMC’s troubled growth path,” said FBR Capital Markets analyst Daniel Ives. While a deal would make a “ton of sense” for Dell,
EMC/VMware holders would still prefer a breakup of the antiquated federated model and split, he said in a note.
If Dell buys EMC , the deal could be the biggest-ever in the technology industry. EMC has a market value of about $50 billion.
Dell spokesman David Flink and EMC spokesman Dave Farmer declined to comment.
A deal could further strengthen Dell’s presence among corporate clients at a time when founder Michael Dell has been trying to transform the company he founded in 1984 into a complete provider of enterprise computing services such as Hewlett-Packard and IBM. The talks come two years after Michael Dell and private-equity firm Silver Lake took Dell private for $24.9 billion, ending its decades-long run as one of the world’s largest publicly traded PC makers.
Reuters
