Dell reportedly launching takeover of EMC to create computing colossus

Dell is reportedly offering about $US33 a share to acquire EMC Corp, in a deal that would create a computing colossus and help both companies cope with a demand slowdown.

The proposal includes a tracking stock in VMware valued at about $US8 a share that would be issued to EMC shareholders, said a person familiar with the story. A deal may be announced as soon as Monday, the person said.

Dell is speaking to banks about raising at least $US40 billion to finance the purchase, a person with knowledge of the matter has said.

A deal would bring together the largest storage maker and the No. 2 server company as the industry undergoes rapid change with the shift to mobile and cloud computing.

Dell, which was taken private for about $US25 billion in 2013, will use the combination to expand its product lineup in high-end data storage equipment as it tries to lure customers away from Hewlett-Packard Co. and other rivals.

For EMC, the agreement resolves a long overdue leadership succession and a standoff with activist investors.

The current plan would have Michael Dell run the combined entity, a person with knowledge of the matter has said.

EMC and Dell both need ways to manage a slump in their main businesses, with EMC weighing strategic options amid pressure from shareholder Elliott Management Corp.

Though the combination would be costly and difficult to finance, it would provide a one-stop shop for EMC's digital storage products with Dell's servers, which help businesses tackle mammoth computing tasks.

JPMorgan Chase & Co., Barclays Plc, Bank of America Corp., Credit Suisse Group AG and Deutsche Bank AG are among the banks that have been approached about financing the deal, people said.