EMC Corp., the state’s biggest technology company, is reportedly poised to be acquired by computer maker Dell Inc. for more than $53 billion, a deal that could breathe new life into the Hopkinton company even as it portends layoffs.
The acquisition could be announced as early as Monday, according to Bloomberg News, which cited a person familiar with the matter. The companies as of late Sunday were still negotiating details of the transaction and a final agreement had not been signed, Bloomberg said.
The deal would be the culmination of a more than yearlong effort by EMC to address mounting competition in its core data storage business amid pressure to break up the company from an activist investor and the looming retirement of its longtime chief executive, Joseph Tucci.
EMC previously held merger talks with Dell and Hewlett-Packard Co., which later decided to split itself into multiple companies. The combined company would be a potent rival to HP and International Business Machines Corp. in the market for big-business computers and software.
Although there is not a lot of overlap between Dell’s computers and servers and EMC’s storage products, the added debt taken on to finance the acquisition may push the combined company to cut costs through job reductions and other steps. EMC has 9,700 employees in Massachusetts, ranking it as one of the state’s biggest employers, and 70,000 worldwide.
An EMC spokesman declined to comment. Dell, based in Round Rock, Texas, could not immediately be reached for comment.
The deal, which is reminiscent of the sale of Digital Equipment Corp. to Compaq Computer in 1998, marks an important milestone in the state’s history as a tech hotbed.
EMC, founded in 1979 by Richard Egan and Roger Marino, who met as college roommates at Northeastern University, is a direct descendant of the tech companies along Route 128 that revived the Massachusetts economy in the 1960s and 1970s, only to be swamped by the advent of the personal computer.
Like its predecessors along “America’s Technology Highway” — Digital, Wang Laboratories, Data General — EMC has come under attack by seismic shifts in the computing industry.
Those companies built large computer systems for corporations, and were unable to adapt when the industry moved to smaller, cheaper personal computers.
EMC rose to prominence by selling data storage systems, typically made up of refrigerator-sized cabinets stocked with disk drives, the networking gear that connects them, and specialized software that runs it all.
But the increasing use of cloud computing systems — renting Internet-connected data centers run by companies like Microsoft Corp. and Amazon.com Inc., rather than owning your own racks of servers and storage — means fewer companies need to buy and manage their own data storage.
EMC’s longevity has been remarkable in the technology industry, where billion-dollar companies can rise and fall seemingly overnight. It generates more than $24 billion a year in revenue, and remains solidly profitable.
Under Tucci, EMC moved to evolve with the times by acquiring VMware Inc., a maker of virtualization software, for $635 million in 2003. Publicly traded VMware, which is 80 percent owned by EMC, is worth $34 billion today, with its revenue growing 16 percent a year. EMC’s market value is $54 billion, the biggest for a Massachusetts tech company.
Dell plans to pay slightly more than $25 a share in cash, plus tracking stock for VMware valued at about $8 for each EMC share, according to Bloomberg. It would be the largest takeover in the history of the tech industry. EMC will have 60 days to look for a better offer, Reuters reported.
VMware makes products that allow a business to treat thousands of separate servers as one giant pool of data-processing power or data storage. This lets companies use their existing hardware far more efficiently, reducing the need for them to buy more.
“I would argue that EMC’s acquisition of VMware is probably the best acquisition done by any company, arguably in the history of technology,” said Neeraj Agrawal, a general partner at Boston-based Battery Ventures.
But some investors called for EMC to move faster. The hedge fund firm Elliott Management Corp., which owns about 2 percent of EMC shares, has been publicly pressuring EMC to break itself apart since last year.
Elliott has specifically called for EMC to split itself from VMware. Elliott contends that EMC’s shares have been too stagnant, pointing to sluggish performance compared with direct competitors and the broader stock market, and says that EMC’s and VMware’s shares could fetch higher prices if the two companies were separated.
Dell, too, has faced problems. The company that became famous for selling inexpensive, built-to-order PCs by mail in the 1990s was taken private in 2013 in a leveraged buyout by founder Michael Dell and Silver Lake, an investment firm.
With PCs becoming cheap, generic commodities with low profit margins, Dell has tried to reinvent itself as a provider of high-end hardware and services to large enterprises. The deal would allow Dell to sell more services to its existing customers.
EMC’s rise transformed its hometown of Hopkinton and the surrounding area, providing jobs for generations of Massachusetts residents and long-lasting wealth for those lucky enough to hold its stock during periods of rapid growth in the 1990s.
Chris Lynch, an IT industry veteran and partner at Cambridge venture capital firm Accomplice, said EMC’s role as a corporate citizen is “a cultural phenomenon that has basically gone the way of the buffalo.”
“You now have generational success in the company, which is sort of unheard of today,” he said. “For a company that is in the innovation business and you innovate or die, there are a lot of traditional cultural and economic values that they instill and represent which I think are phenomenal.”
For a time, the company even had a strong swashbuckling streak. When he helped EMC seize the data-storage market in the 1990s, legendary former EMC executive Moshe Yanai was known to command thousands of engineers, some of whom got to ride in the helicopter he would land on the grounds of EMC headquarters.
“Moshe did some very interesting things back in the day,” said Steve Duplessie, a former EMC sales employee who today runs Enterprise Strategy Group, an IT analysis firm in Milford. In the 1980s, Duplessie said, Yanai caused some heart palpitations at a critical EMC customer, one of the largest banks on Wall Street.
“No one ever did this at the time, but he would just dial into the machine and update the code on the fly. And he, of course, did that one time and the bank came to a halt,” Duplessie said. “People lost their minds.”
But for all its dominance and longevity in the tech industry, EMC has remained a relative unknown even in its home state.
“When we were looking for a new advertising agency in 1999, the agencies bidding for the account made an intro tape, showing us what they can do and why we needed their services,” said Gil Press, a former EMC marketing executive. “Boston-based Arnold Worldwide went around Boston asking people if they knew who EMC was. No one did.”
EMC has tried to raise its public profile over the years, acquiring naming rights for the luxury EMC Club section of Fenway Park in 2005.
Founders Egan and Marino were major benefactors of their alma mater, Northeastern University, with both names carved into buildings on the campus. Egan went on to become ambassador to Ireland under President George W. Bush, while Marino owned the Pittsburgh Penguins of the National Hockey League for several years.