After Intel, Cisco to invest $150 million stake in VMware

San Francisco: Cisco Systems Inc, the world's largest maker of the routers and switches that direct data over computer networks, will buy a stake worth $150 million in VMware Inc, becoming the second investor this month to take a stake in the virtualisation software maker, whose parent company EMC Corp is taking it public.

Earlier this month leading chipmaker Intel Corp had announced a stake acquisition in Vmware for $2195 million, for 9.5 million class A common shares of VMware, giving it 2.5 per cent of all outstanding common stock, and a seat on the board. (See: Intel acquires 2.5 per cent stake in software firm VMware). After the public offer, Intel's stake would reduce to 1 per cent.

Cisco will own 1.6 per cent of VMware's common stock when the investment closes, the companies said in a joint statement Friday. They will also collaborate on joint product development and marketing.

VMware's software turns computers into multiple 'virtual' machines by taking processing power on a business computer that is not being used, reducing the companies' need for equipment to buy and maintain in data centres.

One of the goals of the investment was to accelerate the adoption of VMware's software on computers using Cisco's networking hardware.

Cisco and VMware said they want to extend the reach of virtualisation products beyond the data centre and into desktops and remote offices.

Vmware expects to raise about $741.4 million, after expenses, from the sale of 33 million shares through its public offer at between $23 and $25 per share and list them on the New York Stock Exchange under the symbol 'VMW'.