VMware Closes $2.7B Pivotal Acquisition

VMware closed its $2.7 billion Pivotal Software acquisition this week, boosting its cloud-native software portfolio.

VMware Executive Vice President Ray O'Farrell will lead VMware's new Modern Applications Portfolio business unit, uniting the Pivotal and VMware cloud-native applications teams, VMware CEO Pat Gelsinger said in a statement.

VMware plans to make Pivotal's products and services part of its Tanzu line, a portfolio of products and services to build software on Kubernetes, launched in August, VMware said.

Pivotal and VMware were part of the same family prior to the acquisition; Dell Technologies owned controlling stakes in both companies. VMware's acquisition will permit tighter integration between the two organizations, Gelsinger said at the time VMware announced the acquisition, in August. At the same time as the Pivotal acquisition, VMware announced plans to buy Carbon Black, for enhanced security, for $2.1 billion. That deal wrapped in October.

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The Pivotal acquisition is part of VMware's long transition from a virtual machines provider to a vendor of both VMs and containerized software. In addition to beefing up its container support organically, VMware paid $550 million for Kubernetes startup Heptio in December 2018; earlier that year, it acquired CloudHealth for multicloud operations. It acquired Bitnami, which packages containerized applications for easy deployment on Kubernetes and multicloud environments, in May.

Pivotal conducted an IPO in 2018 that valued the company at more than $3 billion, but slower than anticipated growth in 2019 saw its stock price crash way below its list price of $15. That dip took place in June last year: The acquisition by VMware was announced in August.

Pivotal was founded in 2013, combining teams and contributed assets and technology from EMC and VMware, which was at that time majority-owned by EMC. Dell acquired EMC, along with its VMware assets and Pivotal, in 2016.

The deal matters to service providers because those organizations are moving their internal operations to containers and public and private clouds, and helping carriers make that transition is strategic to VMware.

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— Mitch Wagner Executive Editor, Light Reading