EMC Selling VMware Stake to Intel for $218.5 Million

7/10/07Follow @bbuderi

Storage leader EMC Corp. will sell a $218.5 million piece of its virtualization software subsidiary VMware to Intel Capital, the investment arm of the giant chipmaker, the companies announced yesterday. The news came in the midst of EMC’s bigger move to sell about 10 percent of VMware to the public in an offering expected to come later this summer. All told, the public sale could bring in between $740 million and $950 million, depending on the price point and how many shares are ultimately offered.

VMware, which EMC purchased three years ago for $625 million, has proved an astute acquisition for the Hopkington-based EMC. There’s a nice write-up in today’s Boston Globe by Hiawatha Bray. The company’s virtualization software essentially creates many virtual machines on one individual physical computer, providing a substantial increase in the number of tasks that can be handled by the computer. Microsoft has identified VMware as an up-and-coming competitor—and you’ll find a bit more on that angle in today’s Wall Street Journal, although a site password is required.

EMC announced last February that it would sell between 33 million and 37,950,000 shares of VMware on the public market at between $23 and $25 per share, cashing in on its subsidiary’s substantial run-up in value since the acquisition. Yesterday’s announcement indicated that after the public sale, Intel would own roughly 2.5 percent of VMware’s common stock. It would also get a seat on the VMware board.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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