VMware is set for a great year ahead. The California based tech giant recently announced the acquisition of Pivotal Software, a leading cloud-native platform provider of digital transformation technology and services. It’s expected for Pivotal to be a core player to the company’s portfolio of products and services.
The acquisition announced back in August was finally closed for $2.7 billion price tag — and allows VMware to transform from a pure virtual machine company into a cloud offering vendor.
A Single Management Platform
The Pivotal acquisition serves VMware’s purpose to deliver “consumable, enterprise-ready cloud native offerings to customers to help them achieve better business outcomes,” said Ray O’Farrell, head of the new VMware Modern Application Platform business unit.
“Digital transformation and the applications that drive it should not be restricted only to cloud and software giants. We believe that modern application development solutions and practices need to be easily accessible to everyday enterprises across the globe,” said O’Farrell.
Together with the recent Heptio and Bitnami deals, the acquisition of Pivotal Software fits neatly into VMware Tanzu. “VMware Tanzu is built upon our recognized infrastructure products and further expanded with the technologies that Pivotal, Heptio, Bitnami and many other VMware teams bring to this new portfolio of products and services,” O’Farrell wrote in a blog post announcing the $2.7 billion deal.
Combining VMware’s Kubernetes run-time infrastructure and management and Pivotal’s developer-centric offerings will result in the formation of the most comprehensive application platform in the industry.
Up until the closed deal, Pivotal Software had been publicly traded on the New York stock exchange. Now, the acquisition is completed, and Pivotal is VMware’s new, wholly-owned subsidiary.
Pivotal Software Before the Acquisition
Pivotal was founded in 2013, and its Cloud Native platform handles software innovation for world-renowned brands. Global 2000 companies use Pivotal’s technology to achieve strategic advantages in software development and other operations.
“Pivotal has fundamentally changed how the world’s biggest brands build and manage software with a focus on developer productivity through platform abstractions and development techniques as well as connecting the business with the developers” stated Edward Hieatt, Senior Vice President, Customer Success of Pivotal. “The combination of Pivotal and VMware offers the most comprehensive application platform in the industry and is a win for our customers, a win for Pivotal, and a win for VMware. We’re excited to team up with VMware to help more enterprises become like modern software companies by adopting DevOps and Lean techniques developed by internet giants and the startup community.”
VMware and Pivotal go way back. Both companies were part of the consortium of companies purchased by Dell during the time it acquired EMC in 2015. Dell acquired EMC for $67 billion in the time when both VMware and Pivotal were part of the corporation but operated independently. When Dell acquired EMC, Pivotal was considered a key component, a stable company that could stand on its own. But, VMware and Pivotal have another, even stronger connection. Pivotal was born with to give EMC, VMware, and GE (each owned a 10% stake in Pivotal for a time) a separate company to shoulder transformation initiatives.
Because of its strong background, Pivotal raised $1.7 billion before going public in 2018 — out of which Ford’s $180 million investment led $ 650 million in funding in 2016. Soon after going public, the company had a fallout. After a disastrous June earnings report, Pivotal’s stock dropped 42% in one day. By offering $15.00 a share, VMware rescued the struggling company, and as of today, it’s fully owned by the tech giant.