REUTERS: VMware Inc and Pivotal Software Inc are negotiating a deal for VMWare to acquire Pivotal, according to a regulatory filing from Dell Technologies Inc on Wednesday, valuing Pivotal, a maker of software development and management tools, at about US$4 billion.
Pivotal shares jumped 63per cent to US$13.60, while shares of VMWare were down about 3per cent at US$148.25 in extended trading. Dell is the controlling stockholder for both the companies. Dell's shares dropped 1.65per cent to US$47.80 in after-market trading on Wednesday.
Special board committees at both companies are negotiating an agreement to acquire all of the outstanding shares of Class A stock of Pivotal for cash at US$15 a share, according to a regulatory filing.
The offer price represents an 81per cent premium to Pivotal's Wednesday close. Shares of Pivotal, which provides tools for software developers working with cloud services from different companies, have fallen 49per cent this year.
VMWare provides cloud computing and virtualization software and services.
Pivotal confirmed that it was in discussion with VMWare but said a definitive agreement between the companies has not been executed.
The VMware Special Committee has requested that Dell exchange Pivotal Class B stock for VMWare Class A stock.
Dell and the VMware special committee are discussing a to-be-agreed upon exchange ratio, the regulatory filing showed.
Michael Dell and Dell owned 131.3 million shares of Pivotal Class B stock, not including the 44.2 million shares of Pivotal Class B stock held by VMware, according to the filing.
(Reporting by Ankur Banerjee in Bengaluru; Editing by Cynthia Osterman)