EMC mulls selling stake in VMware, reportedly calls deal a 'distraction'

The storage giant, which holds an 80 percent stake in VMware, is exploring exiting the deal, citing the virtualization giant as a "distraction."

Image: EMC

Data storage giant EMC is reportedly exploring selling its stake in VMware, according to a report.

Citing multiple sources familiar with the negotiations, the New York Post on Thursday said the virtualization giant, in which EMC owns an 80 percent stake, is said to be a "distraction," according to sources speaking to the publication.

The Post reported that EMC's chairman and chief executive Joe Tucci has "given in" to pressure from EMC stakeholder Elliot Management, run by billionaire Paul Singer, which has a 2 percent stake in EMC. 

Elliot Management has invested more than $1 billion in EMC, in efforts to push the storage company to spin off its virtualization subsidiary, Reuters reports.

Singer's hedge fund also has stakes in Juniper Networks, and Riverbed Technology.

Other sources speaking to the New York-based daily newspaper said computer maker HP may step up as a possible buyer in the case of a sale.

EMC bought VMware in 2004 for $600 million, and has grown over time, currently standing at $41.7 billion in worth according to its market cap.

VMware now accounts for close to one-quarter of EMC's revenue for fiscal year 2013. 

Update at 2:25pm ET: A new Reuters report, citing a source familiar with negotiations, said the New York Post story was bunk, saying EMC was not considering selling its stake in VMware. We've reached out to both companies for more.

(via Reuters)


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