Previously, the firm has publicly pressured EMC to divest its stake in VMware, arguing that the investment has left the parent undervalued and has caused the two companies to compete. Elliott, led by billionaire Paul Singer, had a hand in installing two new EMC board members earlier this year and owns a little more than 2 percent of EMC’s shares. The move to have VMware buy out EMC is being supported by activist fund Elliott Management, according to sources. Shares of EMC rose and VMware shares fell in trading on the New York Stock Exchange today. VMware shares fell by $4.82 or more than 5 percent to $86.12. In this instance, VMware would issue new shares in exchange for EMC shares in combination with cash raised from the issuance of new debt.ĮMC shares rose by more than 3 percent to $26.85 in trading on the New York Stock Exchange Wednesday. EMC currently owns 80 percent of VMware.ĮMC board directors are now looking at a second scenario in which VMware would effectively buy out its parent EMC in a transaction known as a downstream merger. VMware’s shares jumped nearly 3 percent Tuesday after the story. The discussion to have VMware buy out its parent company comes after Re/code outlined the possibility that EMC could buy out its remaining stake in VMware as part of a more conventional deal.
Pressure has also increased for CEO Joe Tucci, 68, to get the company on a solid footing before he names a successor and retires.
Over the last several months it has explored selling the company to both Hewlett-Packard and Cisco Systems, as well as acquiring other companies and selling off assets. That is one of several options EMC’s board is exploring as part of a wide-ranging strategic review of its operations and as a partial response to pressure from an activist shareholder.
#Emc stock buyout software
Data storage and IT giant EMC is contemplating a deal under which it would be acquired by VMware, the software company in which it is a majority owner, according to sources briefed on the discussions.
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