EMC plans to keep stake in VMware, despite investor pressure: source

Thu Sep 11, 2014 2:50pm EDT
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By Jim Finkle

Boston (Reuters) - EMC Corp plans to keep its majority stake in software maker VMware Inc despite pressure from activist hedge fund Elliott Management, a person familiar with EMC's thinking told Reuters on Thursday.

The person, who was not authorized to publicly discuss the matter, described as inaccurate a Thursday report in the New York Post that EMC had decided to explore selling its stake in business software maker VMware. The source did not provide further details.

In July, Elliott Management notified EMC it had acquired a stake in the company and urged Chief Executive Officer Joseph Tucci to spin off VMware, saying the move would boost the value of the two assets.

Tucci has balked, saying VMware is one of his company's "most strategic assets."

In July he said he would meet with Elliott officials. EMC and Elliott have declined to discuss what has happened since.

At a Citi investor conference last week, David Goulden, the CEO of EMC's information infrastructure division, said the company wants to hold on to VMware.

"If we separate it, we would actually destroy value," he said, according to a transcript of the Sept. 3 event. "It wouldn't be as efficient a mechanism and it wouldn't be as strong a competitor in the marketplace as we are today."

Shares of EMC were up 0.7 percent at $29.71 in afternoon trade. VMware was down 0.5 percent at $96.91.   Continued...

VMware CEO Pat Gelsinger addresses a news conference in Tokyo July 15, 2014. REUTERS/Yuya Shino