The report said Dell plans to pay slightly more than $25 a share in cash, plus tracking stock in cloud software maker VMware valued at about $8 for each EMC share.
Dell will be raising at least $40 billion from banks and financial institutions to finance the purchase. The deal will be the largest technology deal. The pending $37 billion merger between Broadcom and Avago is the largest tech deal at present.
VMware is valued at $32.3 billion, while EMC has a market capitalization of $53.6 billion.
The IT deal would combine EMC’s leadership in digital storage with Dell’s share of the market for servers. Dell, which was taken private for about $25 billion in 2013 with the support of IBM, could use the combination to expand its products in data storage equipment market and seek to attract enterprise customers away from Hewlett-Packard and other rivals.
Since Dell CEO Michael Dell will be running the combined entity, EMC will be able to find a replacement for chief executive officer Joe Tucci, who announced retirement plans earlier.
Reuters reports that EMC is planning to seek out other suitors. EMC asked for a go-shop provision to be included in the merger agreement that will allow it to invite bids from other parties and pay a discounted breakup fee to Dell if there is a deal with another company.
IBM, Cisco Systems and Hewlett-Packard could theoretically be potential suitors for EMC.
The acquisition of EMC would assist Dell to diversify away from the stagnant personal computer market and give it the scale to attack the more lucrative market for managing and storing data for businesses.