VMware Acquires AirWatch for $1.5B

NEW YORK (The Deal) -- VMware  (VMW) on Wednesday said it would acquire AirWatch for $1.54 billion, moving to boost its secure mobile computing offerings.

Atlanta-based AirWatch is a maker of tools that manage mobile devices, applications and content. The privately held company boasts more than 10,000 customers and 1,600 workers spread across nine offices. The company in February 2013 took in $200 million in equity funding from investors, including Insight Venture Partners and Accel Partners.

Terms of the deal call for Palo Alto, Calif.-based VMware to pay $1.175 billion in cash up front for AirWatch and about $365 million in installment payments and assumed unvested equity. Post-close AirWatch will continue to be run by company cofounder and CEO John Marshall. The company's Atlanta offices will become the base of VMware's mobile operations.

VMware, a maker of cloud infrastructure software, in a statement said the deal would build its expertise in mobile. The company said that the purchase would be funded via cash on hand and via $1 billion in new debt provided by VMware's majority owner, storage vendor EMC  (EMC).

"With this acquisition VMware will add a foundational element to our end-user computing portfolio that will enable our customers to turbo-charge their mobile workforce without compromising security," CEO Pat Gelsinger said.

VMware separately said it expects to report fourth-quarter sales of $1.48 billion, at the high end of guidance issued in October and an increase of 15% from the same three months of 2012. The company in October acquired Desktone for $120 million, and in the last year has shed four units for undisclosed terms.

If you liked this article you might like

7 Essential Rules for Investing in Tech Stocks

Jim Cramer on Nordstrom's Plans to Go Private

In Retailers' Gang War, This Is Why I Am Rooting for Walmart: Market Recon

Janet Yellen and Powerball - 5 Things You Must Know Before the Market Opens

Cramer: This Rally Isn't Without Meaning