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EMC to Acquire VMware

By R&D Editors | November 30, 2003

EMC to Acquire VMware

EMC Corporation has signed a definitive agreement to acquire Palo Alto-based VMware, Inc., a privately held software company focusing on Intel-based virtual computing software, in a cash transaction valued at approximately $635 million. The acquisition is subject to customary closing conditions and regulatory approvals, and is expected to be completed early in the first quarter of 2004.

The acquisition of VMware is expected to play a key role in EMC’s strategy to help customers lower their costs and simplify their operations by deploying virtualization technologies across their heterogeneous IT infrastructure to create a single pool of available storage and computing resources. This “Virtual Information Infrastructure” will enable organizations to dynamically configure and reconfigure their compute and storage environments with no downtime as their business needs change. EMC expects VMware’s expertise in server virtualization, together with EMC’s storage virtualization experience, will serve as a strong foundation for next-generation information lifecycle management solutions.

VMware’s technology enables multiple operating systems &#151 including Microsoft Windows, Linux and NetWare &#151 to run simultaneously and independently on the same Intel-based server or workstation and dynamically move live applications across systems with no business disruption. These “virtual machines” integrate seamlessly into existing physical infrastructures and management frameworks, allowing users to see resources as if they were dedicated to them, while administrators manage and optimize those resources globally across the enterprise.

Joe Tucci, EMC President and CEO, said, “Customers want help simplifying the management of their IT infrastructures. This is more than a storage challenge. Until now, server and storage virtualization have existed as disparate entities. Today, EMC is accelerating the convergence of these two worlds.”

“We’ve been working with the talented VMware team for some time now,” Tucci continued, “and we understand why they are considered one of the hottest technology companies anywhere. With the resources and commitment of EMC behind VMware’s leading server virtualization technologies and the partnerships that help bring these technologies to market, we look forward to a prosperous future together.”

Diane Greene, VMware President and CEO, said, “This combination is a natural fit. Beyond the obvious product synergies, EMC’s leadership in advancing open standards and its relationships with the leading IT players will foster ongoing innovation and industry-wide cooperation. VMware will continue its deep relationships with the world’s leading server and storage vendors as well as ISVs and systems management providers to jointly develop useful innovation for our customers.”

Upon completion of the acquisition, EMC expects to take a charge of approximately $15 to $20 million in the first quarter of 2004 for the value of VMware’s in-process research and development costs and other integration expenses Including the aforementioned charges, the transaction is expected to be dilutive in the first quarter of 2004 by $0.01 per diluted share and is not expected to impact EPS for the full 2004 fiscal year. EMC expects the addition of VMware to be accretive to EPS by $0.01 in fiscal year 2005.

Also upon completion of the acquisition, EMC plans to operate VMware as a software subsidiary of EMC, headquartered in Palo Alto and led by Diane Greene, VMware’s current President and CEO. VMware will remain focused on developing, selling and servicing VMware’s products and solutions.

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