HP and EMC merger talks called off, says report

HP and EMC merger discussions are formally over, according to a report by Reuters.
Written by Liam Tung, Contributing Writer

Computing giant HP has called off talks with storage-to-virtualisation company EMC over a potential merger, which the company explored ahead of its recently announced consumer and enterprise split.

The two companies' "off-and-on" merger discussions that have reportedly taken place over the past year have officially been put to rest, with an announcement expected to come as early as Wednesday, Reuters reported, citing unnamed sources with knowledge of the situation.

News the two were exploring a merger surfaced ahead of HP's revelation this month that it would carve itself into two public companies, one handling PCs and printers and the other looking after servers, storage, networking and services.

As Reuters and CNBC have noted previously, the two companies were still trying to form a deal last week however stumbled on the issue of price. But the deal is now "dead", according to Reuters' sources.

At HP's announcement that it would split its business, the company's CFO Cathie Lesjak said it had stalled its stock buy-back programme ahead of its November 25 earnings because it was in possession of material non-public information — a comment flagging that it was in serious talks over a deal of some kind.

EMC is the largest enterprise storage vendor, but the jewel in its crown is the 80 percent stake it holds in virtualisation firm, VMware.

Earlier this year EMC chief Joe Tucci announced the company's "federated" strategy, under which it operated three key business: EMC and its security company RSA; VMware; and its big data spin-off Pivotal.

However, ahead of HP's split, EMC has been under pressure from activist investor Elliot Management, which holds about $1bn in EMC stock, to sell VMware — a move EMC has since said it wasn't interested in.

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