(Reuters) - Data storage products maker EMC Corp is buying much of Cisco System Inc's stake in their joint venture VCE, Bloomberg said, citing people with knowledge of the matter.

The VCE joint venture, set up in 2009 as a one-stop shop for data centers, bundles Cisco's networking equipment and servers with EMC's storage gear and software from EMC's VMware Inc subsidiary.

EMC will merge VCE into its business and consolidate its sales into its quarterly results, Bloomberg reported.

The change is expected to be made public on Wednesday, sources told Bloomberg.

Cisco will retain investment in the business, but at a reduced stake, Bloomberg reported.

Neither EMC, nor Cisco could immediately not be reached for comment.

EMC on Tuesday said it would make an announcement regarding a "new business development" Wednesday morning.

Elliott Management has been pushing hard for EMC to pursue merger or spinoff opportunities.

Activist investor Paul Singer had sent a letter to the company earlier this month asking it to separate its virtualization software unit VMware.

EMC Corp, also scheduled to report its third quarter results on Wednesday, said it has no plans to give up its 80 percent stake in VMware.

Reports of EMC and Cisco encroaching on each other's turfs had sparked off rumors of the partnership fraying.

EMC is also rumored to be closing in on a deal to buy cloud start-up company Maginatics.

(Reporting By Kanika Sikka in Bangalore)