As the end of the year approached, VMware, a global provider of virtualization solutions, added a new addition to its “weapons arsenal”. On Monday, the company announced that it had completed a $2.7 billion deal to buy Pivotal, a cloud software company, which was first announced in August. VMware is transforming itself from a pure virtual machine company to a cloud-native vendor that can manage infrastructure anywhere, and the acquisition gives it a new “weapon” on the road.
Earlier this year, the company also completed a deal to acquire Heptio and Bitnami. VMware hopes that these acquired businesses will be well integrated into the VMware Tansu platform, which aims to integrate Kubernetes Containers and VMware virtual machines into one management platform.
Ray O’Farrell, Executive Vice President and General Manager of VMware’s Modern Application Platform business, announced in a blog post that the deal has been completed: “VMware Tanzu is based on our recognized infrastructure products and will be based on Pivotal, Heptio, Bitnami and many other VMware teams are further expanding the technology that this new portfolio of products and services brings. ”
Craig McGill joined The Former in VMware’s acquisition of Heptio, where he is now vice president of research and development. He told a conference in November that while the deal was not yet complete, he saw the future of Pivotal’s ability to help the company at the professional services level. “In the future, when Pivotal becomes part of our company, it will not only provide technology, but also provide deep expertise to support application transformation initiatives,” he says. ”
Pivotal was a publicly traded company on the New York Stock Exchange before the deal was completed, but has been a wholly owned subsidiary of VMware since Monday. It is worth noting that the deal is not a merger between two random companies. In fact, VMware and Pivotal were both associates that Dell acquired when it bought EMC for $67 billion in 2015. Although both companies are owned by EMC and became part of the company after dell’s acquisition, they are both operated independently. When Dell acquired Pivotal, the latter was seen as a key product to get a foothold.
Pivotal and VMware have another strong connection: Pivotal was originally co-founded by EMC, VMware and General Electric, which once owns 10 per cent, to give these large companies a separate company to implement the transformation plan.
Before going public in 2018, Pivotal raised $1.7 billion, much of it from an exciting day in 2016, when the company announced $650 million in financing from Ford’s investment, including $180 million. At that point, Pivotal’s future looked bright at the time, but after the listing, the company reported a poor report in June that caused its share price to collapse and its market value to evaporate 42 per cent in a day.
Pivotal’s shares hit a high of $21.44 on May 30 and then fell all the way to a low of $8.30 on August 14, causing its market value to plunge from $5.828 billion on May 30 to $2.257 billion on August 14. It was then that VMware admitted that it was considering buying the struggling company. VMware’s offer at $15 a share represents a big premium to Pivotal’s August low. Since Monday, Pivotal has officially become part of VMware.