Dell is in advanced talks to acquire Hopkinton, Mass. data storage company EMC, according to multiple reports.
Citing sources familiar with the matter, the Wall Street Journal revealed yesterday that an official announcement could be imminent, perhaps within a week. There remains the possibility that the deal can still fall through, an insider told the paper.
Currently, negotiations are centered on a deal requiring Dell to spin-off VMware. Last year, EMC’s fifth-largest shareholder, activist Elliot Management, was reportedly pressing the company to sell off its 80 percent stake in virtualization specialist VMware. Joe Tucci, EMC chairman and CEO pushed back against the idea saying that such a move made little strategic sense.
Last month, EMC was reportedly contemplating having VMware buyout EMC. The downstream merger would have served as a way to shore up the company’s finances and silence calls to spin off the virtualization specialist.
EMC’s market capitalization currently sits at approximately $50 billion, setting a high monetary benchmark for any possible acquisition. At that price, a Dell-EMC deal would rank as the biggest technology-related buy in history.
So far, May’s Avago-Broadcom deal ranks as the top tech acquisition for 2015. Singapore-based Avago Technologies announced on May 28 that it was buying fellow chipmaker Broadcom for $37 million. The transaction is expected to close in the first quarter of 2016.
In a sign that the talks between technology giants are serious, Reuters reported that Dell is also in talks with banks to finance the mammoth, $50 billion-plus deal.
If successful, the EMC buy will represent one of the biggest corporate shakeups for Dell since the company was taken private in 2013. Joined by Silver Lake, a private equity firm, and backed by a $2 billion loan from Microsoft, CEO Michael Dell led the buyback of his namesake company in a deal valued at over $24 billion.
“Dell has made solid progress executing this strategy over the past four years, but we recognize that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision,” said Michael Dell in a statement at the time.
Meanwhile, EMC has been experiencing weakness in its traditional high-end storage business. “While pleased with many aspects of the second quarter, especially with the market acceptance and rapid growth of our newer products, we also saw customers become more conservative around refreshing their traditional infrastructures as they plan their IT transformations,” said Tucci in a July 22 statement related to EMC’s second quarter financials.
Pedro Hernandez is a contributing editor at InfoStor. Follow him on Twitter @ecoINSITE.