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VMware agrees to buy Carbon Black, Pivotal for $4.8B

(Bloomberg) --VMware Inc. agreed to purchase two software companies on Thursday for almost $5 billion, expanding its reach in development tools and cybersecurity.

The Palo Alto, California-based company said it was purchasing Pivotal Software Inc., which sells cloud software and services, for $2.7 billion, and Carbon Black Inc., a cybersecurity firm, for $2.1 billion.

VMware, which makes virtualization and networking tools and is majority-owned by Dell Technologies Inc., said the combined company will provide software to build, run, manage, connect and protect any app on the cloud or any device. Purchasing the two companies will accelerate VMware’s plan to deliver secure, multicloud application development.

The two acquisitions “will meaningfully expand our ability to power our customer’s digital transformation,” said Pat Gelsinger, VMware’s chief executive officer.

“These acquisitions address two critical technology priorities of all businesses today -- building modern, enterprise-grade applications and protecting enterprise workloads and clients,” he said.

VMware will acquire San Francisco-based Pivotal for a blended price of $11.71 per share in cash and stock, the company said in a statement.

“Together, we will form an organization that combines Pivotal’s expertise modernizing organizations with VMware’s capabilities and experience operating at scale,” Pivotal CEO Rob Mee said. Pivotal, a long-term partner of VMware, also is majority-owned by Dell.

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VMware said it will pay $26 a share in cash for Waltham, Massachusetts-based Carbon Black, giving the target company an enterprise value of $2.1 billion. Once the deal is complete, VMware said it would be positioned to provide “highly differentiated, intrinsic security cloud” through big data, behavioral analytics and artificial intelligence.

“We now have the opportunity to seamlessly integrate Carbon Black’s cloud native end point protection platform into all of VMware’s control points,” said Patrick Morley, Carbon Black’s CEO.

Both transactions are expected to be completed in the second half of VMware’s fiscal year, which ends Jan. 31.

JPMorgan Chase & Co. acted as financial adviser to VMware on the deals, with Morrison & Foerster LLP acting as legal adviser to VMware on the Carbon Black acquisition and Wilson Sonsini Goodrich & Rosati as legal counsel to VMware on the Pivotal purchase.