On Tuesday, EMC Corporation (NYSE:EMC) announced that it had entered into a contract to buy Virtustream, a private company for $1.2 billion.
The company’s decision to acquire another firm confirms that it is not approaching a corporate breakup. The terms of the contract dictate that it will be a cash transaction. The contract is expected to be complete by the end of September, once both parties have reviewed the terms and the contract approved by the boards.
According to EMC’s report, the acquisition will not have a significant influence on the company’s 2015 financial results. In fact, the firm expects the buyout to add value to the business and also result in better revenues per share in 2016.
EMC’s Chief Executive Officer, Joe Tucci described the acquisition as a game changer. He cited that the acquisition would be a great opportunity for the company as a platform for positive change. This will allow the company to adapt better to its rapidly changing fronts since it is one of the fastest developing companies.
EMC Corporation (NYSE:EMC) provides systems used to store company information. The company also holds up a series of firms that usually work together but also have some healthy competition among themselves. The structure has been under constant pressure from Elliot Management Corporation since last year. Elliot has been constantly pressuring EMC to sell some of the shares that the firm owns in other companies like VMware Inc.
The company has manifested itself on the cloud through Vmware. Adding Virtustream on board will allow the company to its Federation structure while at the same time sending a solid message that the company is not about to break. Virtustream was formed in 2009, and it offers cloud services to mainstream enterprises as well as the government.
EMC’s shares have not been performing so well in the past year. They have experienced a 10% overall drop within that period but on Friday they closed with a 0.8% increase. A more significant rise is expected especially with the influence of the new information regarding the acquisition.
