Arik Hesseldahl writes the idea of a downstream merger between the two companies came as EMC reviews strategic options and faces pressure from activist investor Elliott Management.
Sources told Re/code that no agreement has been reached yet and a transaction may not materialize.
Entrepreneur Paul Singer’s investment firm has urged the data storage company to sell its 80.6 percent stake in VMware, citing competition issues, the report said.
EMC bought VMware for $625 million in 2003 and sold almost 15 percent of the virtualization software firm’s shares four years later through an initial public offering.
Re/code pegs VMware’s market value at $37 billion.