Dell Inc is planning to use equity in cloud software company VMware Inc to help pay for its acquisition of EMC Corp in a deal valuing the data storage company at more than US$55bil (RM227.8bil), according to people familiar with the matter.
While the bulk of its offer will be in cash, Dell also plans to pay EMC shareholders with "tracking stock" that follows the value of the 20% of VMware that EMC does not own, the people said.
A deal could be announced as early as next week, assuming that financing arrangements and the remaining negotiations are completed, the people said.
The sources asked not to be identified because the negotiations are confidential. Dell, EMC and VMware did not immediately respond to requests for comment.
An acquisition of EMC would strengthen Dell's presence among corporate customers at a time when Michael Dell is trying to transform his three-decade old PC company into a provider of complete enterprise computing services.
EMC has been under pressure from Elliott Management Corp to spin off VMware. The activist investor has said EMC's structure of combining several businesses obscures "enormous" value.
Dell - which has about US$12bil (RM49.7bil) in debt, according to Bernstein analyst Toni Sacconaghi - went private in 2013 in a deal worth US$25bil (RM104.2bil), less than half EMC's current market capitalisation. — Reuters
Reporting by Greg Roumeliotis in New York; Editing by Christian Plumb
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