EMC Grabs Virtustream in $1.2 Billion Deal

EMC Corporation (EMC) has signed a definitive agreement to acquire cloud software and infrastructure-as-a-service provider Virtustream for $1.2 billion in cash, according to announcement.

The acquisition will be used to form EMC’s new managed cloud services business as the company places a greater focus on delivering cloud-based services to its customers.

Virtustream’s portfolio will be available both directly and through EMC’s channel partner ecosystem once the acquisition is complete, according to the company. EMC said its Federation service provider partners will also receive access to Virtustream’s xStream cloud management software platform, with the ability to deliver their own white-labeled services based on the software.

Virtustream CEO Rodney Rogers will report to Joe Tucci, EMC Chairman and CEO once the acquisition is complete.

“Virtustream is an exceptional company and this is a critical and transformative acquisition for EMC in one of the industry’s fastest-growing and most important sectors,” said Tucci, in a statement. “With Virtustream in place, EMC will be uniquely positioned as a single source for our customers’ entire hybrid cloud infrastructure and services needs. We could not be more delighted that Virtustream will be joining the EMC Federation family. It’s a game changer.”

Rogers said he and the board of directors at Virtustream chose EMC due to the company’s focus on enterprise technology and the expanse of service assets within the EMC Federation. The company has been in talks to go public for the past year.

“We believe that we help fulfill the EMC vision of being able to run any type of enterprise application in the cloud, anywhere in the world, through ultimately whatever method of consumption makes sense for the customer,” said Rogers, in a blog post. “EMC’s reach, sales force, commercial model and asset base will literally give us the opportunity to take this precious kernel of IP that we have developed and reach the world with it.”

EMC said the deal is particularly significant because it will introduce both an on- and off-premise managed cloud software and services capability to the Federation Enterprise Hybrid Cloud Solution, which will subsequently allow EMC to move customer applications into the cloud. The Virtustream xStream platform is also integrated with VMware vSphere, meaning it can deliver service level agreements for infrastructure availability as well as application performance and transaction latency.

The deal is expected to close in the third quarter of 2015, and has already been approved by the boards of directors of EMC and Virtustream as well as Virtustream’s stockholders, according to the announcement. EMC anticipates the transaction will not affect its 2015 financial results and instead will be added to revenues for 2016.

Earlier this month, EMC hosted EMC World 2015 in Las Vegas, where the company announced a slew of new products and solutions, including the launch of Project CoprHD as well as several new converged infrastructure solutions, including XtremIO 4.0 and VMAX3.