US data storage colossus EMC looking to rivals HP and Dell as possible merger targets

 
Oliver Smith
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HP and EMC merger talks broke down recently (Source: Getty Images)
EMC, the biggest maker of corporate data storage equipment, reportedly held merger talks with rivals Hewlett-Packard (HP) and Dell.

Under pressure from an activist shareholder and the expected retirement of its longtime chief executive, the company is exploring options including a sale, according to the Wall Street Journal.

Merger talks between HP and EMC, which were on for about a year, broke down weeks ago over financial terms and over fear that shareholders of both the companies would reject the deal.

On the talks with Dell, given the relative sizes of the companies, Dell may not contemplate a full takeover of EMC, but might explore buying assets, including its core storage business, the reports said.

The status of the talks between EMC and Dell remained unclear, the Wall Street Journal reported.

EMC declined to comment on the report, and HP said it would not comment on “rumour or speculation”.

Dell did not respond in time when asked to comment.

In July, hedge fund Elliott Management picked up a stake in EMC and urged its chief executive Joe Tucci, who is expected to retire in February, to spin off its stake in software-maker VMware, saying the move would boost the value of the two assets.

Elliott Management also declined to comment on the report.

EMC, which owns about 80 per cent of VMware, bought the company in 2004 for $700m (£428.5m).

VMware accounted for about 22 per cent of EMC’s revenue of $23.2bn in 2013.

EMC shares rose 0.51 per cent yesterday following the reports to $29.68, HP’s shares fell 0.87 per cent to $36.47.

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