Cisco Systems (News - Alert) will acquire an equity stake in VMware Inc, according to a PRNewswire report. Reportedly, the company will buy $150 million of VMware Class A common shares from EMC (News - Alert) Corp., VMware's parent company. The purchase is subject to customary regulatory and other closing conditions.
With the acquisition, Cisco will own nearly 1.6% of VMware's total outstanding common stock, which is less than one percent of the combined voting power of VMware's outstanding common stock. Additionally, VMware has announced that there is a possibility that a Cisco executive would be inducted into its Board of Directors in the near future.
Both companies have also signed an agreement to collaborate in activities involving joint development, marketing, customer and industry initiatives. An integration of the networking and virtualized infrastructure of both companies would enable them to enhance solutions for datacenter optimization and also to offer the advantages of virtualization to remote offices and end-user desktops, in addition to datacenters.
Cisco hopes to strengthen inter-company collaboration to expedite customer acceptance of VMware virtualization products incorporating its networking infrastructure. It also hopes to develop customer solutions enabling the intersection of virtualization and networking technologies.
Calvin Azuri is a contributing writer for TMCnet
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