VMware Buys SpringSource for $420M

VMWare, the virtualization pioneer opens its wallet to acquire software maker SpringSource.
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PALO ALTO, Calif. (

TheStreet

) -- Virtualization giant

VMware

(VMW) - Get Report

has thrown down $420 million to acquire privately held

SpringSource

in an attempt to boost its cloud strategy.

The deal, which was announced after the market's close Monday, is valued at approximately $362 million in cash and equity, plus around $58 million worth of SpringSource's unvested stock and options. The acquisition has already been approved by SpringSource's shareholders, and is expected to close in the third quarter, according to VMware.

Clearly with an eye on the future, VMware is already touting SpringSource's ability to build, run, and manage applications within an online "

cloud.

"

"

This acquisition places us right at the intersection of the most important forces in the software market today; virtualization, modern application frameworks and cloud computing," said Paul Maritz, the VMware CEO, in a statement.

VMware, which beat analysts' estimates in its recent

second-quarter results

, is seen as a virtualization trailblazer, but faces stiff competition from rivals such as

IBM

(IBM) - Get Report

,

Microsoft

(MSFT) - Get Report

,

Citrix

(CTXS) - Get Report

and

Oracle

(ORCL) - Get Report

, which recently

snapped up

Virtual Iron

.

Virtualization has been one of the

hottest

technologies in recent years, prompting Citrix's 2007 acquisition of VMware arch-rival

XenSource

.

The technology, which lets users divide physical hardware into multiple "virtual" chunks, has become more popular among users looking to juggle several operating systems and applications. Virtualization also is one way budget-minded firms can reduce the amount of hardware within their data centers.

Despite all its SpringSource brouhaha, shares of VMware slipped 15 cents, or 0.47%, to $31.85 in extended trading.

--

Written by James Rogers in New York

.