An acquisition of EMC would strengthen Dell’s presence among corporate customers at a time when Michael Dell is trying to transform his three-decade old PC company into a provider of complete enterprise computing services. It would also be a way for Dell to gain a few traction in an increasingly dormant PC market. The billion-plus takeover attempt by Dell would be the largest tech deal ever.
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FBR & Co.’s Daniel Ives this afternoon writes that as more details filter out about a possible deal for Dell (DELL) to buy storage vendor EMC (EMC), and with it the majority of software vendor VMware (VMW), investors in the latter two are waking up to what he considers a bad dream. Dell has been negotiating directly with EMC CEO Joe Tucci.
Long-running merger talks between Hewlett-Packard and EMC broke down previous year over financial terms and fear that shareholders of both companies would reject the deal, the Wall Street Journal reported at the time.
Analysts were looking for an offer of at least $30 per share. EMC shares ended buying and selling on Friday up 2.5 % at $27.86 after tech web site Re/code reported that Dell was providing $27.25 a share for EMC as well as to inventory in VMware. Sources told Reuters it was too soon to talk about price.
“They could carve it out, do dollars and Euros and also get private financing”, said the banker, who wished to remain anonymous.
The deal may or may not happen this week, according to sources.
Dell still holds a lot of debt, $11.7 billion (£7.6 billion) according to recent stats.
“We continue to believe that the mere existence of conversations with Dell are consistent with our belief that EMC’s board is continuing a strategic review of myriad options, the outcome of which will be beneficial to shareholders”, said Sanford Bernstein analyst A.M. (Toni) Sacconaghi, Jr.in a research note this week. And that only cost the company half of what it’s looking to spend now.
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Sacconaghi’s concerns were echoed by Wells Fargo analyst Maynard Um.
