After Dell spinout, VMware CEO looks to cloud partnerships and M&A

Newly independent VMware Inc (VMW.N) will look to pursue deeper deals with cloud computing providers and consider “large scale” acquisitions that could help the company grow, Chief Executive Raghu Raghuram told Reuters.

VMware on Monday completed its spinout from Dell Technologies Inc (DELL.N), which owned 81% of the Palo Alto, California-based software firm, to become a separate publicly traded company worth about $64 billion.

Founded in 1998, VMware led a major change in how big companies used their data centers with technology that let data center owners slice up physical computers into “virtual” machines that could be quickly scaled up or down for the task at hand to get more work done. VMware became a mainstay in corporate data centers.

But as big companies began to move computing work to cloud providers such as Amazon.com’s (AMZN.O) Amazon Web Services, some analysts predicted VMware’s usefulness would decline.

Instead, many large businesses are opting to use a combination of their own data centers and one or more cloud providers, which has in turn spurred several cloud providers to strike partnerships with VMware for better access to its customer base.

Raghuram said now that VMware is not under Dell’s umbrella, he wants to aggressively pursue more of those deals.

“This truly allows us to go out and be the Switzerland of the industry,” he said.

VMware will also look to use its shares as a currency for buying other companies to add technologies to its offerings.

“We are not a controlled entity any more. This allows us to use equity to do large-scale transactions down the road,” he said. “Small, hot startups or reasonably valued big companies – it gives us access to the full spectrum.”

Under the spinout, Dell and other shareholders will receive a special dividend of about $27.40 per share, or about $11.5 billion, which Dell has said it plans to use to help pay down debt. Reuters