EMC likely to keep Virtustream

emc-rack-close-up-2As part of a cunning plan to boost shareholder support for its sale to Dell, EMC appears to be thinking it is wise to retain a majority stake in Virtustream.

It had planned to place the loss-making cloud services provider in a joint venture with VMware. This will help improve VMware’s shares, which have lost about a quarter of their value since Dell’s $60 billion deal to buy EMC was announced on October 12.

EMC’s share value puts the acquisition at risk because Dell was set to pay EMC shareholders $24.05 per share in cash and a special stock that tracks the common shares of VMware.

Word on the street is that under the new plan, EMC would assume Virtustream’s losses by keeping a majority stake, and VMware would only have a minority stake. EMC may announce the plan as early as December.

Under the terms of the Dell deal, EMC shareholders will receive a 0.111 share of VMware tracking stock for each EMC share.  Analysts have said the plan would pressure VMware’s share price as it effectively increases the size of the float.