Dell looks to EMC deal to boost corporate presence

Fri Oct 9, 2015 12:35pm EDT
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By Greg Roumeliotis and Lehar Maan

(Reuters) - Dell Inc is in talks with banks to fund a takeover of data storage company EMC Corp, sources familiar with the matter said, as the world's No.3 PC maker looks to beef up its cloud-based offerings for corporate customers.

The potential acquisition of EMC, which has a market capitalization of $52 billion, would be the largest technology sector deal on record.

It could help Dell diversify away from the stagnant personal computer market and give it the scale to attack the faster-growing and more lucrative market for managing and storing data for enterprises.

"Dell and EMC are increasingly competing with the likes of Amazon, Google, Microsoft, and others that have deep pockets. Becoming larger would make Dell and EMC of greater strategic importance to their customers," said technology analysts at Jefferies, in a note to clients. "Secondly, a combination would allow Dell and EMC to provide a more complete private cloud stack."

Dell and EMC declined to comment.

EMC's shares rose 4.3 percent to $27.07 on the New York Stock Exchange. Shares of VMware Inc, the 'virtualization' software company majority owned by EMC, fell 6.2 percent.

Analysts said an offer of at least $30 per share would be required, which would put the deal price at about $58 billion. Sources told Reuters it was too soon to talk about price.

Dell has made progress in securing financing for the deal, despite a choppy corporate debt market, sources told Reuters.   Continued...

Dell logos are seen at its headquarters in Cyberjaya, outside Kuala Lumpur September 4, 2013. REUTERS/Bazuki Muhammad