Maryland investors may be interested to know that data storage giant EMC recently looked into merger deals with competitors Hewlett-Packard and Dell, according to industry insiders. It is uncertain whether an agreement will be reached with either company.
EMC, based in Hopkinton, Massachusetts, held talks with HP on and off over the last year. The negotiations ended without an agreement due to financial terms and concern that shareholders of both companies may turn down the deal. Talks with Dell, who may not have been able to fully takeover EMC, also ended without a deal. If the proposed HP merger had taken place, it would have created a massive digital empire valued at approximately $129 billion.
EMC is reportedly the biggest supplier of top-tier data storage systems in the world, but it is facing a weak core market, the impending retirement of its CEO and a rebellious group of activist shareholders. The company's storage division outperformed industry expectations, but its revenue still fell by one percent due to the falling price of storing data.
The company's second-largest business, software maker VMware in Palo Alto, California, is said to be performing better, but EMC is under pressure from new investor Elliott Management to spin that business off. Elliott Management, who purchased an EMC stake in July, believes the move would increase the value of both EMC and VMware.
Business acquisitions over a certain value require the approval of regulators at the Federal Trade Commission and the Department of Justice to ensure that the deal does not lessen competition. Companies that are considering buying a business or selling a business may wish to consult with business law attorneys to ensure all the required rules and regulations in such a deal are followed.
Source: The Boston Globe, "EMC talked with HP, Dell", Hiawatha Bray, Sept. 22, 2014
Source: Reuters, "EMC explores merger, holds talks with Dell, HP - WSJ", September 21, 2014