NEW YORK (TheStreet) -- EMC (EMC) is considering selling its 80% stake in cloud computing infrastructure provider VMware (VMW) , The New York Post reported today, citing unnamed sources. Calling The New York Post "surprisingly accurate" on M&A news, UBS said the likelihood of change at EMC has increased and it has become a potential takeover target.
WHAT'S NEW: EMC is exploring the possibility of selling its stake in VMware, which could be acquired by HP (HPQ) , according to one source, The Post reported. EMC could also look to sell other assets, the newspaper quoted a second unnamed source as saying.
ANALYST REACTION: UBS analyst Steven Milunovich wrote that he is more convinced in the wake of the Post story that "something is up" at EMC. Although EMC has denied in the past that it would consider selling or spinning off VMware, the company could change its tune, the analyst stated. HP could buy VMware or all of EMC, while Oracle (ORCL) and Cisco (CSCO) are also potential buyers of EMC, Milunovich believes. The analyst kept a $33 price target and Buy rating on shares of EMC.
WHAT'S NOTABLE: Activist investor Elliott Management, a hedge fund, has taken a $1B stake in EMC and wants the company to spin off VMware, The Wall Street Journal reported in July. Early last month, research firm FBR Capital wrote that an EMC spin-off of VMware could enhance shareholder value for both companies and make VMware a top acquisition candidate by a larger technology company. The firm kept an Outperform rating on EMC at that time.