EMC To Buy Virtustream for $1.2 Billion in Cash

EMC Corporation has entered into a definitive agreement to acquire privately-held Virtustream, Inc.

When the transaction closes, Virtustream will form EMC’s new managed cloud services business. The acquisition represents a transformational element of EMC’s strategy to help customers move all applications to cloud-based IT environments. With the addition of Virtustream, EMC completes a comprehensive hybrid cloud portfolio to support all applications, all workloads and all cloud models.

Virtustream chairman and CEO Rodney Rogers will report to Joe Tucci, EMC chairman and CEO.

“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. “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.”

One of the world’s fastest-rising cloud software and services companies, Virtustream is trusted by enterprises worldwide to migrate, run and manage mission-critical applications in the cloud, including SAP. Its customers include enterprises such as The Coca-Cola Company, Domino Sugar, Heinz, Hess Corporation, Kawasaki, Lexmark, Scotts Miracle-Gro and a global footprint of service provider partners who use Virtustream software to power their cloud offerings.

Virtustream’s cloud software and Infrastructure-as-a-Service portfolio will be delivered directly to customers and through partners. EMC Federation service provider partners will receive access to Virtustream’s xStream cloud management software platform and be enabled to adopt and deliver their own branded services based upon it.

Presently EMC provides the Federation Enterprise Hybrid Cloud Solution – an on-premise private cloud offering that provides on-ramps to public cloud services such as VMware vCloud Air. Virtustream brings to the EMC portfolio a managed cloud software and services capability – whether on or off premise – which EMC also intends to incorporate into the Federation Enterprise Hybrid Cloud Solution. With the addition of Virtustream, EMC will enable customers to move their entire application portfolio into a cloud environment.

Founded in 2009 by Rogers and president and CTO Kevin Reid, Virtustream delivers application lifecycle automation and orchestration with a particular focus on I/O-intensive mission-critical enterprise applications such as SAP S/4HANA and others. Virtustream’s xStream platform is integrated with vSphere and architected to deliver SLAs for not only infrastructure availability, but for application performance and transaction latency as well.

“Virtustream has established itself as an industry leader and innovator for running mission-critical enterprise applications in the cloud,” explained Rogers. “We’re proud to be joining the EMC Federation where our combined capabilities, products and services will allow us to accelerate our vision of delivering the platform of record for enterprise systems, and address the complete breadth of cloud computing needs.“

Recognition by Analyst Firms
Virtustream’s rapid rise to premier cloud provider status is evidenced by Forrester* ranking Virtustream as one of only two ‘Leaders’ in the hosted private cloud solutions market. Gartner has recognized Virtustream in the Gartner Magic Quadrant for Cloud Infrastructure as a Service – one of the few independent companies to reach this status worldwide in public cloud IaaS.

In addition, Virtustream integrates a comprehensive defense-in-depth security model and governance solution. This attribute is validated by Virtustream’s highest ranking in the area of security and compliance in Gartner’s Critical Capabilities for Public Cloud Infrastructure as a Service report. Virtustream delivers its capabilities both as software for on-premise or service provider deployment and as the foundation of the company’s IaaS solution.

The all-cash transaction is expected to close in the third quarter of 2015, subject to customary closing conditions, is valued at approximately $1.2 billion, and has been approved by the boards of directors of both EMC and Virtustream and the requisite Virtustream stockholders. The transaction is expected to have no material impact to EMC financial results in 2015 and is expected to be additive to revenues and accretive to EPS in 2016.

David Goulden, CEO, EMC information infrastructure, commented: “As IT organizations race to keep pace with the demands of the modern and rapidly changing business, they need to leverage both private and public clouds. The EMC Federation Enterprise Hybrid Coud Solution enables customers to deploy rapidly a hybrid cloud that incorporates the best of both. Today’s news completes the picture, culminating in what customers want most, a one-stop-shop experience for their entire hybrid cloud needs.”

Pat Gelsinger, CEO, VMware, Inc., commented: “This acquisition is great news for our customers, VMware and the EMC Federation of businesses. With the addition of Virtustream, we will be able to offer customers a comprehensive set of hybrid cloud offerings, including private, managed and public cloud solutions. As we deliver VMware vCloud Air to our customer base to help them continue their journey to the cloud, Virtustream complements and expands our value proposition.”

Bill McDermott, CEO, SAP, commented: “SAP has a long-term partnership with Virtustream to host mission-critical applications in the cloud. We are excited to see Virtustream become part of EMC. SAP will continue to serve as a partner with the new EMC managed cloud services business and we remain ever committed to supporting the hybrid cloud landscapes of shared customers around the world.”  

Don Whittington, VP and CIO, Florida Crystals Corporation, commented: “Virtustream has been a key strategic partner for us for the last 5 years and has had a material impact on our complex IT landscape and how we run our business. The coming together of Virtustream and EMC is a natural fit that offers great promise through their combined ability to address the wide spectrum of cloud computing requirements.“

Tom Frana, president and CEO, ViON Corp., commented: “ViON leverages Virtustream’s xStream software platform to provide secure cloud solutions for federal government agencies. The combination of Virtustream’s capabilities with EMC’s robust security portfolio and comprehensive cloud solutions will allow us to bring even more compelling services to market.”

Gil Torquato, CEO, UOL Diveo, commented: “Both Virtustream and EMC are valued partners of UOL and are critical to our success in meeting the rapidly growing demand for enterprise cloud solutions in Brazil. Virtustream becoming part of the EMC Federation pairs Virtustream’s xStream cloud management software with EMC’s rich technology set for the delivery of market-leading, end-to-end cloud solutions.”

*Source: The Forrester Wave  Hosted Private Cloud Solutions, Q4 2014