VMware acquiring Carbon Black and Pivotal in software deal

23 Aug 2019

The sign at the entrance to VMware's offices in Silicon Valley. Image: SundryPhotography/Depositphotos

VMware’s latest deals will accelerate the company’s SaaS offerings and expand its ability to enable digital transformation for customers.

On Thursday (21 August), VMware announced its intent to make two hefty acquisitions, which amount to a total enterprise value of $.4.8bn.

The publicly traded software company, of which Dell is the majority shareholder, provides cloud computing and virtualisation software and services.

As it announced that its revenue for the last quarter reached $2.44bn, VMware said that it would acquire Carbon Black for $1.9bn and Pivotal for $800m.

Carbon Black is a publicly traded security company that provides services to modern cloud-native workloads. Using big data and behavioural analytics, Carbon Black is used to protect clients against cyberattacks.

In a statement, VMware said that the acquisition of Carbon Black “represents the evolution of VMware’s intrinsic security strategy, where security features are built into the infrastructure and across workloads, clients and applications”.

The company noted that the Carbon Black deal will be an all-cash transaction for $26 per share, with an enterprise value of $2.1bn.

VMware CEO Pat Gelsinger said: “By bringing Carbon Black into the VMware family, we are now taking a huge step forward in security and delivering an enterprise-grade platform to administer and protect workloads, applications and networks.”

Addressing tech priorities

Pivotal, which provides tools for software developers, will also be acquired by the company at $11.71 blended price per share and $15 per share for public stockholders. The enterprise value of transaction is $2.7bn. As with VMware, Dell is also the controlling stakeholder in Pivotal Software.

“For the last six years, Pivotal has been at the leading-edge of modern software development, helping organisations transform how they build and run their most important applications,” VMware said in its statement.

“Pivotal offers a powerful set of assets including a leading developer-centric platform, tools and service that accelerate modern app development.”

Rob Mee, CEO of Pivotal, said: “The time is ideal to join forces with VMware, an industry leader who shares our commitment to open source community contributions and our focus on adding developer value on top of Kubernetes.”

Looking ahead, Gelsinger added that acquiring the two companies would help VMware build “on another solid quarter”.

“These acquisitions address two critical technology VMware Inc priorities of all businesses today – building modern, enterprise-grade applications and protecting enterprise workloads and clients. With these actions we meaningfully accelerate our subscription and SaaS offerings and expand our ability to enable our customers’ digital transformation.”

Both deals are set to close by January 2020.

The sign at the entrance to VMware’s offices in Silicon Valley. Image: SundryPhotography/Depositphotos

Updated, 9.00am, 26 August 2019: This article was updated to clarify the acquisition prices of Pivotal and Carbon Black. A previous version of this article stated that the two companies were being bought for $4.8bn, but this is the enterprise value of the transactions.

Kelly Earley was a journalist with Silicon Republic