Thursday, October 8, 2015

Dell wants to acquire EMC: report

Personal computer specialist Dell is eying an acquisition of storage firm EMC in order to bolster its strengths in the enterprise sector, according to Reuters sources.

Citing people familiar with the matter, Reuters said that the struggling PC vendor is currently speaking to banks in order to finance the deal, which would come from an all-cash offer. 

If the deal goes through, this could be the IT industry's biggest acquisition ever. It would top the $37bn offer that Avago Technologies made for Broadcom Group. 

While it is unknown what Dell is willing to pay for EMC, the storage vendor currently has a market capitalisation of more than $50bn.

According to Reuters, neither company has commented on the rumours. 

Dell has been trying to diversify its business to become more enterprise-focused in recent years, as the PC industry has faltered. It is a strategy already being taken by Dell rivals HP and IBM, the latter of which has gotten out of the PC industry altogether. 

However, since it was taken private for $24.9bn by founder Michael Dell, Dell does not have the capital to finance a buyout of EMC on its own. Any talks around the acquisition will rest on what value financiers see in the deal. 

EMC's shareholders, meanwhile, may welcome a deal. The company is currently under pressure from Elliot Management Corp, an activist investor which wants EMC to let go of virtualisation specialist VMware, which EMC owns a majority share in. EMC, however, has maintained that it does not intend to pursue a split.

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