EMC-Dell Deal Could Be 'Looming,' FBR Analyst Says

• EMC Corporation EMC shares have been volatile year-to-date and have lost 8 percent during this period.
• FBR & Co’s Daniel H. Ives maintained a Market Perform rating on the company.
• Talks with Dell Inc. DELL for a possible deal could be a “bad dream” for EMC shareholders, Ives mentioned.

The WSJ had reported ongoing talks for a potential deal between EMS and Dell. Numerous media reports mention that the two companies are working hard to finalize an agreement. Analyst Daniel Ives believes that the deal would be a "bad dream" for EMC’s shareholders, while being “more of a nightmare” for VMware, Inc. VMW investors.

Ives said that EMC’s shareholders would “warm up to this deal” only if the bid reaches at least $30 per share. There is still uncertainty around whether Dell would be able to garner the financing required, which could be $30B-$40 billion in debt, depending on the structure of the deal, as well as “if there are any speed bumps during the final negotiation,” the analyst wrote.

In the report FBR & Co noted, “In a nutshell, while many EMC shareholders will likely argue breakup value is in the $35-$38/share range and we strongly agree, it appears that Tucci/Board would rather go down the aisle with Dell than pursue a breakup as the clock approaches twelve with Elliott looming.”

Ives added that in case the deal is inked, Dell may have to reduce its ownership in VMware to 60-70 percent to help fund “the massive price tag.”