July 23, 2012 – Less than a week after a leadership shakeup, VMware announced its intent to acquire virtualization vendor Nicira for $1.05 billion in cash plus millions more in equity awards.

Nicira specializes in software-defined networking and network virtualization platforms, particularly for public and private clouds.  It was founded in 2009 by collaborators on OpenFlow and the Open Networking Forum, and includes engineers from VMware, Google and Yahoo!

Outgoing VMware CEO Paul Maritz said in a release on the proposed deal that Nicira networking assets and virtualization provides VMware new opportunities in data center and cloud networking based on software-defined infrastructure management.

Along with the cash, the deal includes $210 million in assured unvested equity awards. It’s subject to closing conditions, though it has been approved by boards at both vendors, according to VMware. The announcement of the deal also came within an hour of the release of VMware’s quarterly earnings, which included $1.12 billion in revenue, a 22-percent increase compared with that same quarter in 2011.

It was announced July 17 that Pat Gelsinger would take over as CEO on Sept. 1, moving from a previous position as president at EMC Corp., which acquired control of VMware in 2004. Outgoing VMware CEO Paul Maritz is expected to remain on VMware’s board of directors and stay on with parent company EMC as a strategist. In a statement on the succession plans, Gelsinger specifically pointed to software-defined networks as a key differentiator and strategy for VMware.This is also the second deal this month by VMware, which bought cloud automation and management provider DynamicOps for an undisclosed sum.

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