VMware buys mobile management co. AirWatch for $1.54B

Acquisition will allow VMware to expand its virtualization software to the enterprise mobile sector

As mobile invades the workplace, with the “bring your own device” movement becoming more and more popular, mobile security has become equally as important.

For a virtualization software company like VMware, expanding into mobile is key to its future, as is making sure that that software is secure. That is why the company has entered into an agreement to purchase AirWatch, a provider of enterprise mobile management and security solutions, it was announced on Wednesday.

As per the deal, VMware will be paying around $1.54 billion for the acquisition; $1.175 billion of it will be in cash, with the other $365 million in installment payments and assumed unvested equity.

The AirWatch team will remain in its headquarters in Atlanta, which is expected to be expanded, and become the center of VMware’s mobile operations. The team will also continue to report to founder and chief executive officer John Marshall as part of VMware’s End-User Computing group.

Meanwhile, Alan Dabbiere, AirWatch’s co-founder and chairman, will now be overseeing a new AirWatch operating board, which will report to Pat Gelsinger, VMware's chief executive officer.

Founded in 2003, AirWatch is a mobile security and enterprise mobility management provider, with solutions that include mobile device, email, application, content, laptop and browser management. The company delivers solutions for either Corporate Owned or Bring Your Own Device (BYOD) programs.

The company has more than 1,500 employees across nine global offices, and more than 10,000 organizations in 150 countries

For VMware, by acquiring AirWatch, the company will be able to extend its virtualization software from data centers into the increasingly important mobile sector, while not compromising the security of its users. 

"The acquisition of AirWatch extends VMware’s proposition from data-center to device, and strongly positions us for the Mobile-Cloud era," Sanjay Poonen, EVP and GM of VMware’s End-User Computing group, wrote in a blog post.

"After the closing of the acquisition, the combination of AirWatch and VMware will make us an instant leader in enterprise mobile management and security, one of the fastest growing and most strategic markets to businesses today."

As for what AirWatch gets out of the deal, it is the chance to greatly expand its user base and capabilities.

“When we started AirWatch, we set out to help businesses succeed in the mobile explosion that was set to come. Now there are more than 2 billion smart phones and tablets in the world and more than half of those devices touch an enterprise,” Dabbiere said in a statement. 

“By joining a proven innovator like VMware, we now have an opportunity to bring our leading-edge solutions to an even broader set of customers and partners to help them optimize for the mobile-cloud world.”

This is VMware's second billion-dollar acquisition in less than two years; the company bought Nicira, a provider of network virtualization software, for $1.26 billion in July of 2012.  

VMware's financials

In addition to the acquisition, VMware also announced its preliminary fourth quarter financial results.

Revenues for the fourth quarter are expected to be $1.48 billion, an increase of 15% from the fourth quarter of 2012. 

Shares of VMware are up 1.24%, or $1.21, to $98.57 a share.

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