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VMware acquires Nicira

by Lou Whiteman  |  Published July 24, 2012 at 11:36 AM
nicira.jpgVMware Inc. agreed late Monday, July 23, to buy Nicira Inc. in a $1.2 billion deal to bolster the acquirer's portfolio of technologies designed to help corporations cut computing costs.

Palo Alto, Calif.-based Nicira makes software that helps create virtual network infrastructures and services and monitors those networks from afar. The company, which had raised about $50 million in venture capital since its 2007 founding, boasts customers including AT&T Inc., FMR LLC and eBay Inc.

VMware, also of Palo Alto, said the purchase will help it to expand its software tools for individual computers to entire networks.

The company "has led the server virtualization revolution, and we have the opportunity to do the same in datacenter and cloud networking," CEO Paul Maritz said. "The acquisition of Nicira adds to our portfolio of networking assets and positions VMware to be the industry leader in software-defined networking."

Terms of the deal call for VMware, which is 80% owned by EMC Corp., to acquire Nicira for about $1.05 billion, plus about $210 million of assumed unvested equity awards. This is the largest of four acquisitions VMware has announced this year, following undisclosed deal terms to acquire DynamicOps Inc., Cetas Inc. and Wanova Inc.

Nicira has received funding from Andreessen Horowitz, LightSpeed Venture Partners and New Enterprise Associates. Andreessen partner Ben Horowitz in a blog late Monday said the purchase would help VMware capture "a good portion" of the $37 billion data networking market.

"In one bold step, VMware moves from a footnote in the networking market to the clear technology leader in software defined networking and more specifically -- and importantly -- cloud networking," Horowitz wrote.

The sale continues a good run for Andreessen Horowitz, which included Nicira in a fund that also has invested in Skype Technologies SA, Instagram Inc. and Foursquare Labs Inc.

A Skadden, Arps, Slate, Meagher & Flom LLP team including Margaret Brown and Clifford Aronson is representing VMware. Nicira was advised by Qatalyst Partners LLC.
 


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Tags: Andreessen Horowitz | AT&T Inc. | Ben Horowitz | Cetas Inc. | Clifford Aronson | DynamicOps Inc. | eBay Inc. | EMC Corp. | FMR LLC | Foursquare Labs Inc. | Instagram Inc. | LightSpeed Venture Partners | Margaret Brown | New Enterprise Associates | Nicira Inc. | Paul Maritz | Qatalyst Partners LLC | server virtualization | Skadden Arps Slate Meagher & Flom LLP | Skype Technologies SA | virtual network infrastructures | VMware Inc. | Wanova Inc.

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