Credit: Dreamstime
VMware has bought two providers of cloud security and cloud developer services in separate deals valued at about US$5 billion, as it expands offerings for corporate clients.
VMware bought Pivotal Software from its parent company Dell Technologies in a US$2.7 billion deal.
Separately, VMware said it would buy software maker Carbon Black for about US$2 billion in cash.
VMware makes cloud computing software, while Pivotal provides tools for software developers working on cloud services. Carbon Black has a cloud security platform that uses big data and behavioural analytics to protect against cyber attacks.
VMware will pay US$26 per share for Carbon Black at a premium of six per cent over its Thursday close.
Corporations using traditional security products are spending more money and losing more information, VMware chief executive Pat Gelsinger said in an interview. "That's pretty broken," he said, praising Carbon Black's platform.
The company expects Carbon Black and Pivotal to meaningfully add to its revenue in the first year after closing the deals by January next year.
Dell had taken Pivotal public last year for US$15 per share. Thursday's Pivotal deal is for a blended price per share of US$11.71, in which Class A stockholders will get US$15 per share.
Dell's stake in Pivotal will be exchanged for VMware shares.
The company and its founder Michael Dell owned 131.3 million shares of Pivotal Class B stock, not including the 44.2 million shares held by VMware, according to a regulatory filing.
Pivotal shares rose nine per cent in extended trading, while those of Carbon Black were up nearly six per cent. VMware shares fell seven per cent and Dell shares shed three per cent.
JPMorgan Chase & Co advised VMWare on the two deals. Morgan Stanley advised Carbon Black, as well as the special committee of Pivotal's board of directors. Lazard Ltd advised the special committee of VMware's board of directors.
(Reporting by Tamara Mathias and Supantha Mukherjee in Bengaluru, Peter Henderson in San Francisco and Greg Roumeliotis in New York; Editing by Bernard Orr and Richard Chang)
