HP, EMC Reportedly Break Off Merger Talks

It is unclear when negotiations ended, but the two IT giants reportedly had been in talks for several months.

Try as they might, Hewlett-Packard and EMC apparently couldn't fit the pieces together for a monumental merger of two of the largest and most successful old-line IT companies in the world.

The Reuters news service, citing sources briefed on the matter, reported Oct. 15 that the two companies ended months of merger talks as discussed in eWEEK on Oct. 11.

It is unclear when negotiations ended, the sources told Reuters on condition of anonymity because the talks were private.

The opportunity had seemed ripe for such a megadeal because HP, which is renaming its enterprise software/services business Hewlett-Packard Enterprise, is breaking off its PC and printer businesses into a separate company called HP Inc. The match-up of Hewlett-Packard Enterprise servers, services and storage to go with EMC's core storage hardware and software business was seen by some key decision-makers as a golden opportunity to create a powerful new IT provider.

The idea of the merger ostensibly was to synergize two historically successful companies that both required a jolt of energy and also a need to enter new markets to keep that growth coming. On the surface, the idea appeared interesting for a number of reasons, and the companies apparently came close to actually doing it a few months ago.

But the deal fell through, largely because both firms didn't think their shareholders would ultimately approve it. As it turned out, the item was never entered onto a board agenda for either company.

Activist EMC investor Elliott Management had been very public in pushing the storage giant to do the merger with HP Enterprise or spin off one or more of its other properties. EMC also holds majority ownership in VMware, RSA Security and Pivotal.

Being a very large products and services provider isn't always a good thing, especially in the IT business. Huge invariably means slow, and slow-to-move IT companies are the ones that most often lose out in the markets. Even companies with large installed bases and outstanding track records eventually will lose business if they cannot evolve well enough or quickly enough to provide for changing requirements.

Both HP and EMC are trying to become more agile to compete with newer companies, such as Google, Amazon and a number of even younger specialized cloud-service providers, which offer cloud computing services that replace physical data centers.

Queried by eWEEK, HP and EMC each chose not to comment on this story.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...