VMware acquires Pivotal and Carbon Black for $4.8 billion

Vmware cloud logo

Vmware cloud logo

Speaking on Thursday's fiscal second quarter earnings call, Gelsinger provided additional details on the purchase of end point security vendor Carbon Black, and its deal to buy a controlling stake in Pivotal Software.

Both of those deals were valued at a combined $4.8 billion. Both VMware and Pivotal are owned by Dell Technologies.

VMWare makes cloud computing software, while Pivotal provides tools for software developers working on cloud services.

Patrick Morley, CEO of Carbon Black, said in a blog post that this was "a massive opportunity" as there is an "opportunity here for Carbon Black to truly disrupt the security industry - and ultimately help more customers stay safe from cyber-attacks".

VMware said it will pay $26/share in cash for Waltham, Massachusetts-based Carbon Black, giving the target company an enterprise value of $2.1-billion.

Yesterday, VMware announced in a press release that they entered a conclusive agreement to acquire Carbon Black, a cloud-native endpoint security software developer.

The IT space has witnessed a significant number of acquisitions lately as businesses are looking to constantly evolve and better compete in the market, one of the most recent ones being VMware's purchase of Carbon Black and Pivotal Software.

VMware and Pivotal share a history of collaboration and joint innovation, through the co-development and launch of VMware Pivotal Container Service (PKS) in February of 2018.

The company noted that the Carbon Black deal will be an all-cash transaction for $26 per share. We look forward to continuing our work with VMware to deliver even more value to customers building modern applications.

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The corporate and its founder Michael Dell owned 131.Three million shares of Pivotal Class B inventory, not together with the 44.2 million shares held by VMware, in accordance with a regulatory submitting.

"We intend to create deep integrations-agentless on the server workload side, but also collapsing endpoint management and endpoint security into an industry-first unified workspace solution", said Gelsinger.

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

For Carbon Black, this could prove to be a very useful move.

In his presentation, Gelsinger offered a brief roadmap of how Carbon Black's offerings will eventually fit into some of the products that VMware offers.

JPMorgan Chase advised VMWare on the two deals.

"The current cybersecurity industry is simply broken and ineffective", Gelsinger asserted in an investor call touting the acquisition. Pivotal is being bought for a blended price per share of $11.71.

Non-GAAP net income for the second quarter was $667 million, or $1.60 per diluted share. "Our cloud strategy and strong Hybrid Cloud and SaaS growth will substantially accelerate, as we bring Pivotal and Carbon Black into the portfolio".

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.

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