VMware to buy Yahoo’s Zimbra software division

VMware Inc., the global leader in virtualisation solutions, yesterday said that it has agreed to acquire Yahoo Inc's Zimbra, a leading vendor of email and collaboration software.

Financial details were not disclosed. However, analysts expect the deal to be above $100 million but below the $350 million Yahoo paid for the unit in late 2007.

This acquisition will further VMware's mission of taking complexity out of the datacenter, desktop, application development and core IT services, and delivering a fundamentally more efficient and new approach to IT, the company said in a statement.

Under the deal, expected to close by the end of March, the Silicon Valley-based company will purchase all Zimbra technology and intellectual property, and Yahoo can continue to use the Zimbra technology in its communications services, including Yahoo Mail and Yahoo Calendar.

VMware provides virtualisation technology, which helps companies save money on power and hardware by allowing one computer to function like several machines.

The company said the Zimbra acquisition will help it build a portfolio of inexpensive applications to offer business customers.