VMware Cloud: Virtualization giant will spend $5 billion on cloud security companies

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For VMware, which has been focusing more and more on hybrid and multicloud architectures, the two acquisitions create a way for the company to not only deliver the infrastructure its customers need for their digital transformation initiatives, but also new ways to build and update applications and then to secure those apps once they are deployed, CEO Pat Gelsinger says.

Ademi & O’Reilly, LLP Investigates whether Pivotal Software, Inc. has obtained a Fair Price in its sale to VMware, Inc.

Dell had taken Pivotal public past year. With the latest deal, Dell’s stake in Pivotal will be exchanged for VMware shares.

VMware’s CEO said the company will evolve VMware vSphere into a native Kubernetes platform for VMs and containers.

VMware will pay US$26 per share for Carbon Black, marking a premium of 6 percent over its Thursday close, according to Reuters. It has over 5.6K clients and 500 partners worldwide.

Software company VMware said on Thursday that it will acquire two companies for a total of $4.8 billion: Carbon Black for $2.1 billion and Pivotal for $2.7 billion.

“This type of bold move is exactly what the IT and security industries have been looking to see for a very long time”, said Patrick Morley, CEO, Carbon Black.

VMware will integrate Carbon Black’s solutions with its security services including Workspace ONE, AppDefense, NSX, and SecureState.

When there are mega M&A deals, the evidence is often telegraphed in hiring data – and Palo Alto-based VMWare’s ($NYSE:VMW) most recent set of acquisitions was no different.

License revenue for the second quarter was $1.01 billion, an increase of 12% from the second quarter of fiscal 2019.

The combination of Pivotal’s developer experience and assets with VMware’s IT expertise and infrastructure will help deliver a comprehensive portfolio of products, tools and services necessary to build, run and manage modern applications on Kubernetes infrastructure with velocity and efficiency, the company said.

Following the announcement, Wedbush Securities gave its thoughts on where VMware stands to go from here.

“As I have said before, the current cybersecurity industry is simply broken and ineffective with a plethora of fragmented tools, bloatware agents and no cohesive platform architecture”, Gelsinger said. And GAAP operating income for the second quarter was $523 million, an increase of 3% from the second quarter of fiscal 2019.

Together these acquisitions will cost VMware about $2.8 billion in net cash. And free cash flow for the second quarter was $611 million.

“We are pleased with our strong financial performance in Q2, which reflected broad-based strength in all three geographies”, said Zane Rowe, executive vice president and CFO, VMware.

Carbon Black says it now has about 5,600 enterprise customers.

Pivotal recently launched the Pivotal Spring Runtime for Kubernetes and is planning to release Pivotal Application Service for Kubernetes.

VMware said Thursday that it expects both transactions to be finalized in the second half of its fiscal year 2020 ending January 31, subject to customary closing conditions.