Cisco agreed in July 2007 to buy $150 million of VMware shares from VMware’s parent, EMC. It was a purchase of existing shares—not $150 million invested directly in VMware—and VMware received no proceeds when the deal closed in August 2007.
What Cisco agreed to buy
On July 27, 2007, VMware announced that Cisco would purchase $150 million of its Class A common shares held by EMC, subject to customary closing conditions, including Hart-Scott-Rodino review. The announcement estimated that Cisco would own about 1.6% of VMware’s total outstanding common stock after closing, but less than 1% of its combined voting power. VMware’s July 27, 2007 announcement filed with the SEC described the planned transaction.
Those percentages refer to the announced estimate at the time, not Cisco’s current ownership. Common-stock ownership and voting power are different measures, and the stated figures show that Cisco’s voting influence was smaller than its share of the outstanding stock.
How the transaction closed
VMware’s 2007 annual report records that Cisco agreed to buy 6.0 million shares for $25 each and that the purchase closed in August 2007. Because the shares were sold by EMC, this was a secondary sale: VMware itself received no proceeds. VMware’s 2007 annual report provides the completed transaction terms.
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Why the companies made the deal
The investment accompanied a collaboration agreement. Cisco and VMware said they intended to expand joint development, marketing, customer and industry initiatives, particularly around combining networking with virtualized infrastructure. They described goals including data-center optimization and extending virtualization to remote offices and end-user desktops. These were stated aims of the partnership, not evidence that the intended results were achieved.
VMware said it would consider appointing a Cisco executive to its board at a future date. The announcement did not guarantee that an appointment would occur.
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Cisco’s later VMware share purchase
On October 31, 2008, Cisco announced a separate plan to buy 500,000 additional VMware Class A shares from Intel for about $13.3 million. Cisco said the purchase would bring its ownership to approximately 1.7% and build on the companies’ collaboration. Cisco’s October 31, 2008 announcement describes that follow-on transaction. The reviewed records do not establish whether Cisco still owns VMware shares today.
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