$1.05 billion deal sees VMware acquire Nicira

Virtualisation software specialist VMware has purchased Californian company Nicira in a deal worth $1.05 billion (£680 million) in cash and an extra $210 million (£135 million) in unvested equity awards.

The move has been approved by the boards of directors of VMware and Nicira as well as the stockholders of the latter, and is expected to be completed in the second half of the year.

VMware calls its new subsidiary “a pioneer in software-defined networking and a leader in network virtualisation for open source initiatives,” as the company seeks to virtualise networking as it has with other arenas.

“VMware has led the server virtualisation revolution, and we have the opportunity to do the same in data centre and cloud networking,” said Paul Maritz, outgoing CEO of VMware.

“The acquisition of Nicira adds to our portfolio of networking assets and positions VMware to be the industry leader in software-defined networking.”

The acquisition marks a busy seven days for VMware who only announced Maritz’s departure last week, with Pat Gelsinger, president of the firm’s owner EMC, ready to step into the hot seat. Industry experts have said Maritz’s move will “definitely be a loss for VMware” and that he had done “an exceptional job” at the company.

With the additional expertise of Nicira on board, VMware will be hoping to keep the likes of Microsoft at arms' length in the virtualisation world, as the two continue to jostle for cloud dominance.