Originally posted by Joseph F. Kovar on October 8, 2015 on crn.com

Dell may be close to a deal to acquire EMC in a buy that would also include a controlling interest in VMware.

Bloomberg on Thursday reported that Dell is already talking to multiple banks about raising at least $40 billion to finance the purchase of EMC and VMware, with the deal coming to a close as soon as next week.

While other reports have discussed the potential for Dell to acquire EMC, Bloomberg’s specifically states that Dell would also purchase EMC’s controlling stake in VMware.

Under the terms of the deal, Bloomberg reported, Dell would likely take EMC private while keeping VMware public, with Dell possibly selling a portion of the EMC stake in VMware as part of its fundraising plan. Even so, Bloomberg noted, a Dell-EMC merger deal may not happen.

VMware is a big part of EMC’s business. EMC has an 80-plus percent stake in VMware. However, while EMC has a market capitalization of about $50 billion, VMware’s market cap reaches almost $35 billion.

Several Dell solution providers said they are hopeful VMware will be part of any deal by Dell to acquire EMC.

“The real crown jewel is VMware, so that’s very interesting,” a CEO for a top Dell solution provider who did not want to be identified said of the possible deal.

The CEO of a CRN Solution Provider 500 company said the acquisition would be much better for the channel if VMware were included.

“We’re a strong EMC partner, a strong VMware partner, and a strong Dell partner, so this is potentially very interesting, and makes a lot of sense,” the solution provider told CRN.

Jamie Shepard, senior vice president for health care and strategy at Lumenate, a Dallas-based solution provider and longtime EMC and VMware channel partner, said a Dell acquisition of VMware would be neutral.

“From my perspective, whoever owns VMware does not affect our business or our customers,” Shepard told CRN. “VMware under [CEO] Pat Gelsinger has done a perfect job of supporting the entire industry.”

When EMC bought VMware in 2004, most people though EMC would control the VMware solutions, Shepard said.

“I was guilty of that, too,” he said. “But VMware stayed independent. If Dell keeps VMware independent, a change in ownership shouldn’t make a difference. The only potential problem would be if Dell removes Pat Gelsinger and his team and brings in its own people to manage it.”

EMC Chairman Joe Tucci was smart to first put former Microsoft executive Paul Maritz, and then Gelsinger, in charge of VMware, Shepard said.

“Maritz was not tied to anyone,” he said. “Then Gelsinger came in from Intel, where he was used to working with an industry standard, and turned VMware into an industry standard.”

Dell’s buying VMware might actually open the door to new partnerships, Shepard said. “Dell is known for working with third-party technology partners,” he said.

Michael Tanenhaus, principal at Mavenspire, an Annapolis, Md.-based solution provider and Dell channel partner, said a Dell purchase of EMC including VMware would give Dell its own wholly owned intellectual property related to virtualization.

This would make Dell a major player in the software-defined universe, Tanenhaus told CRN. “Software-defined is the future,” he said. “This would give Dell a huge play here.

However, the move would also fundamentally change Dell’s core message to customers and the IT industry, Tanenhaus said.

“Dell has put its stake in the ground as the ‘choice company,’ ” he said. “Dell supports different vendors’ networking technology, different software-defined storage stacks, different converged and hyper-converged infrastructures. Dell wants to offer customers choice. But if Dell buys VMware, it will have a stake in the virtualization race. With VMware, how can it be the ‘choice company’?”

How Dell would finance an acquisition of all or part of EMC has been a big question.

Tony Sacconaghi, senior analyst with New York-based Sanford C. Bernstein & Co., on Thursday wrote that Dell wouldn’t have the financial ability to acquire EMC. In order for EMC to ensure a premium for EMC shareholders, he wrote, Dell would likely have to pay more than $25 billion, “which we believe would be financially very difficult to do.”

If the report of a deal is true, Dell’s plans to acquire EMC may have progressed further than discussions Hewlett-Packard had last year about acquiring EMC did.

Steve Burke contributed to this article.