WSJ: Dell In Talks With EMC Over Potential Merger

(RTTNews) - PC maker Dell Inc. is in talks with data-storage company EMC Corp. (EMC) over a possible merger, the Wall Street Journal reported Wednesday, citing people familiar with the matter.

According to the WSJ report, it was not clear whether the two tech industry heavyweights were in talks about a full-blown merger or a partial takeover of EMC. A merger of the two companies could rank as one of the largest in the tech industry, as EMC has a market capitalization of nearly $50 billion.

Dell, which was taken private in 2013 in a $24 billion leveraged buyout by its founder Michael Dell and private equity firm Silver Lake, has transitioned from personal computers towards more profitable areas like storage and security. A merger with EMC would enable Dell to expand into big-data storage operation.

EMC has been under shareholder pressure after activist hedge fund Elliott Management Corp. took a nearly 2 percent stake in the company last year and urged it to spin off its virtualization software company, VMware Inc. (VMW). EMC holds 80 percent of VMware, which has a market capitalization of $34 billion.

EMC's standstill agreement with Elliott, which was struck in January, expired last month. The company is now said to be trying to come up with a deal that would resolve shareholders' concerns.

In July, EMC reported a 17 percent decline in profit for the second quarter from last year and also lowered its financial outlook for fiscal 2015. The company's shares have declined 13 percent this year.

EMC closed Wednesday's trading at $25.96, up $0.15 or 0.58 percent on a volume of 13.57 million shares. In after-hours, the stock further gained $2.04 or 7.86 percent to $28.00.