VMware in talks to buy Pivotal Software for $15 a share, up from $8.30 close Wednesday

There are no guarantees that the two Dell Technologies portfolio companies would merge.

Dell Technologies lays out its hybrid cloud plan with a heavy dose of VMware Dell Technologies' crown jewel in its portfolio is VMware and the technology giant is now making it the glue that holds its portfolio of companies together.

VMware said it is pondering a purchase of Pivotal Software, which disclosed a price of $15 a share in cash. Both companies are owned by Dell Technologies.

The talks were disclosed in a Dell Technologies regulatory filing. VMware confirmed the talks, but said it regularly looks at options to advance its strategy--even when the partner is basically a sibling. Word of VMware's potential bid for Pivotal comes ahead of the software company's VMworld conference. 

In a statement, Pivotal said:

Pivotal Software, Inc. (NYSE: PVTL), a leading cloud-native platform provider, confirms that, through a Special Committee of its Board of Directors, it is in discussions with VMware, Inc. ("VMware") regarding a potential business combination, and we are proceeding to negotiate definitive agreements with regards to a transaction in which VMware would acquire all of the outstanding shares of Class A common stock of Pivotal for cash at a per share price equal to $15.00. However, a definitive agreement between Pivotal and VMware has not been executed. There can be no assurances that a definitive agreement will be executed between the parties.   

Here's what VMware said:

On August 14, 2019, Dell Technologies filed a Schedule 13D/A with the U.S. Securities and Exchange Commission related to ongoing discussions between special committees at VMware and Pivotal around a potential transaction.

VMware regularly evaluates potential partnerships and acquisitions that would accelerate our strategy. Pivotal is a long-term strategic partner and we're already successfully collaborating to help enterprises in their application development and infrastructure transformation.

VMware's Board of Directors will continue to act in the best interest of all shareholders. There can be no assurance that any such agreement regarding the potential transaction will occur, and VMware does not intend to communicate further on this matter unless and until a definitive agreement is reached.

Pivotal is best known for its Cloud Foundry platform, which could be of use to VMware. Pivotal also brings a subscription software model to VMware, which is primarily license based. Pivotal has subscription revenue of $129 million. 

pivotal-stack.png

 

It's also possible that Pivotal could bring more to VMware's hybrid cloud partnership with Amazon Web Services. Pivotal would combined with VMware would also be a linchpin in Dell's multicloud strategy.

Dell Technologies lays out its hybrid cloud plan with a heavy dose of VMware Dell Technologies' crown jewel in its portfolio is VMware and the technology giant is now making it the glue that holds its portfolio of companies together.

Here's a look at Pivotal's trended revenue. 

pivotal-revenue.png