This Thursday, software firm VMware (opens in new tab) announced it was acquiring two enterprise-focused companies - Carbon Black and Pivotal (opens in new tab). As a result, its shares fell seven per cent at the end of the day.
The deals are in the billions. Carbon Black will set VMware back $2.1 billion, and Pivotal will cost it $2.7 billion. Both companies saw their shares rise eight and six per cent, respectively.
Discussing the acquisitions with CNBC, VMware’s CEO, Pat Gelsinger said both acquisitions would be profitable under VMware next year, and in the year after that, the duo will have contributed with more than $1 billion in revenue, incrementally.
“These acquisitions address two critical technology VMware (opens in new tab), Inc. priorities of all businesses today — building modern, enterprise-grade applications and protecting enterprise workloads and clients,” said Gelsinger.
“With these actions we meaningfully accelerate our subscription and SaaS offerings and expand our ability to enable our customers’ digital transformation.”
Both companies are similar in a sense that they focus on modern workloads. While Pivotal builds modern applications, Carbon Black is more about the security tools necessary for modern applications and infrastructures.
The deal is expected to close in early 2020.
Patrick Morley, Carbon Black’s CEO, called the acquisition a “bold move”. “We look forward to working with the VMware team to continue delivering a modern security cloud platform to customers around the world,” he added.