Dell is reportedly in talks with EMC to strike up a merger deal as the company continues to try to shake off its old PC-only image, and instead be recognised as an end to end solutions provider.
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The deal seemed welcome to investors as EMC shares rose 7.8 percent in after-hours trading after the report came out.
Meanwhile, if the deal did go ahead for Dell, it would strengthen the company’s roll out of its “transform, connect, inform, and protect” strategy, something which the company’s Asia Pacific president Amit Midha has previously admitted still needs work.
It has been a flood of tech and different takeovers this year, merger volume by and large is running at a close record pace.
Acquiring a smaller unit of EMC would make more logical – and financial – sense for Dell than buying all of EMC, which has a market value of $50 billion. A standstill struck in January between Elliott and Hopkinton, Mass.-based EMC that had barred the fund from publicly pressuring EMC expired last month.
EMC executives say that structure brings together the key elements of enterprise IT while letting each business innovate on its own, but critics have said the company might be worth more in parts.
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It’s unclear if this would be a full merger, or if Dell would just buy parts of EMC’s business. It’s one of the state’s last remaining tech titans that can trace its roots to the 1980s. The shares have fallen 13% this year and are minimal changed from when Elliott started its crusade. Quarterly profits have fallen 17 percent in July, causing the company to lower its outlook for the entire year. The virtualisation software company is worth $34.3bn, making EMC’s stake in it worth up to $27.4bn. It isn’t clear which, if any, may be incorporated into a buyout of EMC corporation by Dell.
