The process of the reverse merger would entail VMware buying the larger Dell, which would then allow the company to go public without an initial public offering. Dell already holds a controlling stake in VMware. The deal could potentially be the tech sector's biggest deal ever, according to CNBC.
The company may still decide to go the traditional initial public offering route, sources told CNBC, and the company has not yet decided on exactly which strategic option it will pursue.
Dell acquired EMC for $676 billion in 2015, giving it 80% control of VMware. That purchase, however, is part of the reason Dell is currently saddled with about $50 billion in debt.
Dell's current valuation is unknown since it is private, however. The company took itself private in a $24.4 billion deal in 2013.
VMware shares were down 9% to $136.37 on more than three times its daily trading volume following the report.
More of What's Trending on TheStreet: