Dell to buy EMC in $50bn deal?

Privately held hardware giant reportedly in talks to snap up storage vendor EMC

Dell, the hardware vendor taken private in 2013 by its founder Michael Dell, is in talks to buy storage device maker EMC in a deal that would almost certainly be valued at more than $50bn.

The deal may well be at an advanced stage, with Dell in talks with banks to help it finance an all-cash offer for the Hopkinton, Massachusetts-based storage company.

EMC enjoyed a market capitalisation of around $50bn at the close of business on Wednesday, before news of a potential deal broke.

Despite the "full" valuation for the company, which faces competitive threats from cloud and storage-hardware startups, it is under pressure from "activist investor" Elliot Management, which is pressuring the company to fully spin-off its majority owned VMware software unit, which enjoys a value on its own of around $35bn.

If the deal were to go through, it would be the largest-ever takeover in the technology industry.

The claims are made by Reuters, which cites an insider talking to the newswire "on condition of anonymity because the negotiations are confidential".

"A potential deal could further strengthen Dell's presence among corporate clients at a time when Michael Dell has been trying to transform the company he founded in 1984 into a complete provider of enterprise computing services such as Hewlett-Packard and IBM," suggested Reuters.

It is not the first time that reports have emerged that EMC might be up for sale. In September 2014, the Wall Street Journal reported that EMC had held takeover talks with both Dell and HP - although HP investors would no doubt be wary of the company engaging in yet another big acquisition, given its lamentable record in M&A in recent years.

Although considered the market leader, EMC is being challenged by an array of start-ups focusing on all- or partial-flash based devices, such as Nimble Storage and Tintri, while cloud offers both a threat and an opportunity.