The plan cooked up by Dell, EMC and VMware to combine cloud assets from VMware with those of EMC’s Virtustream unit, now may be on the rocks, according to two reports.
EMC (EMC), which already owns about 80% of VMware(VMW), will retain a majority stake in Virtustream but not combine that cloud business into a joint venture with VMware, according reports from Re/Code and Reuters.
That corporate rejiggering was part of EMC’s deal to merge with Dell, in a $67 billion merger plan announced on October 12.
The issue was that under the original terms, VMware would assume much of the cost of Virtustream’s growing-but-expensive enterprise cloud business and that would hurt the price of VMware’s tracking stock set up as part of the EMC-deal. Now, EMC would assume those costs.
But since VMware share price had dropped 33% since Dell and EMC made the plans public, something was off. On Tuesday, after this news surfaced, VMware shares rose nearly 4% closing at $60.35.
EMC bought Virtustream for $1.2 billion in May.
Coins2Day reached out to EMC, Dell, and VMware for comment and will update this story as needed.
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