VMware Snaps up AirWatch for $1.5B

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VMware, a major EMC subsidiary, announced today that it is acquiring privately-held AirWatch, an Atlanta-based mobile device management (MDM) company, in a deal totaling $1.54 billion. The transaction includes a $1.175 billion cash payout and $365 million in installment payments and assumed unvested equity, according to the companies.

The companies expect the deal to close during the first quarter of 2014, pending customary approvals. John Marshall, AirWatch’s current CEO, will remain on board to lead the group under VMware’s End-User Computing division, headed by executive vice president and general manager Sanjay Poonen.

The acquisition, VMware’s largest to date, will help the company expand into the white-hot MDM market by bringing AirWatch’s fast-growing, cloud-enabled platform into the fold. VMware CEO Pat Gelsinger said during a conference call this morning that the deal would add “a foundational element to our End-User Computing group.”

“Mobile device management has seen explosive growth and a rapid degree of expansion as workers around the world use a variety of devices to increase productivity,” observed Gelsinger during the call. AirWatch will accelerate VMware’s growth by “delivering a complete and proven enterprise-class solution for empowering the mobile workforce.”

ISI analysts Brian Marshall and Stephen Patel agree. In a research note sent to Datamation, they wrote, “With mobile device usage becoming more prevalent in the workplace, we believe this acquisition will prove strategic in complementing and enhancing VMW’s end-user computing business.”

AirWatch, an early MDM provider, quickly emerged as a favorite among VCs and enterprises alike. The company hauled in a staggering $200 million during a Series A round of financing in February 2013, and quickly followed it up with an additional $25 million in May.

The company’s client roster includes several big brands across a wide range of industries. Among its 10,000 are ING, Delta, United Airlines, Lowes and the U.S. Army Corps of Engineers.

In a statement, AirWatch co-founder and chairman noted that “there are more than 2 billion smart phones and tablets in the world and more than half of those devices touch an enterprise.” By joining VMware, AirWatch now has “an opportunity to bring our leading-edge solutions to an even broader set of customers and partners to help them optimize for the mobile-cloud world.”

Soon to be tasked with overseeing AirWatch, Poonen said that the deal “will enable us to deliver unprecedented value to our customers and partners across their desktop and mobile environments.”

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.