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HP and EMC's year-long $132 billion merger talks appear to be in neutral

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September 22, 2014

Don't look now, but EMC has been holding secret strategic business relationship talks with HP and Dell. But after nearly twelve months, merger negotiations now appear to be in neutral, according to various reports in the blogosphere.

However, two background issues that may have encouraged those merger talks in the first place are the February 2015 retirement of EMC CEO and chairman Joe Tucci, and the assault on EMC by Wall Street investor Elliott Management, which seemingly wants VMware sold off and money returned to the shareholders.

The HP/EMC consultations apparently considered a merger of equals with a stock transaction with Meg Whitman as HP/EMC CEO and Joe Tucci as chairman.

But those talks have finished with no positive outcome, reports said. We can certainly understand that HP's storage organization might not relish a tidal wave of EMC products and people coming on board, as the 3PAR products compete directly with EMC's VNX and lower-end VMAX arrays.

Additionally, the various HP object, backup and virtual SAN products all face overlapping and duplication of offerings with the equivalent and competing EMC products.

Overall discussions with Dell are said to have involved Dell acquiring some EMC assets as well as a potential merger.

The latter possibility was thought over to be less likely given the disparity in size between Dell and EMC.

There is also the issue of sorting out which storage products would have precedence with a set of strongly overlapping products, starting with Dell's Compellent and EqualLogic arrays going head to head with EMC'sVNX product line.

EMC is being advised by JP Morgan Chase in the talks. Other potential merger/takeover partners could be Cisco and Oracle. We'll keep you posted on this and other IT news as they happen.

For Cisco, assimilating EMC's storage products would be relatively easy, as the only competing product is its Invicta all-flash array, which has not stirred the market that much.

From the point of view of Oracle, an EMC storage product infusion could look great, however. Larry Ellison's Pillar line of SAN arrays would disappear while EMC would fit fairly nicely with the ZFS storage line.

But would Oracle want to take on another hardware acquisition and start selling lots of products quite separate from the converged Oracle hardware/software engineered system?

One thing is for sure-- things are heating up and we're going to hear more about EMC's future with its ideas being energized by Elliott Management's influence in the segment.

Source: The Wall Street Journal.

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