By Lisa Beilfuss
EMC Corp. said Tuesday it has agreed to acquire privately held
Virtustream for $1.2 billion, a move that may suggest a corporate
breakup isn't looming.
The all-cash transaction is expected to close in the third
quarter and has been approved by both companies' boards. EMC said
the deal won't have a material impact on this year's financial
results and is expected to add to revenue and per-share earnings in
2016.
Chief Executive Joe Tucci called the Virtustream deal "a game
changer," adding that it is "a critical and transformative
acquisition for EMC in one of the industry's fastest-growing and
most important sectors."
Massachusetts-based EMC sells systems used to store corporate
business information and maintains an unusual federation of related
companies that collaborate but also compete at times. The
federation structure has been under attack by Elliott Management
Corp. since last summer, and Elliott has been pressuring EMC to
spin off its stake in VMware Inc., among other things.
EMC has a cloud presence through VMware. The Virtustream
addition appears to be another step in building EMC's federation
structure and a potential sign that no breakup is forthcoming.
Virtustream, founded in 2009, provides cloud services to
government and enterprise customers including SAP SE, Coca-Cola Co.
and Hess Corp. Its xStream cloud software platform is tightly
integrated with VMware vSphere, the companies said.
EMC shares, down about 10% this year through Friday's close,
rose 0.8% in premarket trading.
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