VMware, the EMC subsidiary that brought virtualization software to the mainstream, said Monday that it expects to raise US$741.4 million in its initial public stock offering--and that Intel will supply another US$218.5 million.
Intel Capital already has invested in other virtualization companies, including SWsoft and Virtual Iron. But Intel's VMware investment is coming well after the virtualization company has grown beyond its start-up roots: VMware software is mature, the company is well established among customers, and EMC is planning to sell about 10 percent of VMware's stock in the initial public offering.
In a regulatory filing Monday, EMC said it plans to sell 33 million shares at a price between US$23 and US$25 per share, yielding a total between US$759 million and US$825 million. At a price of US$24 per share, and including overallotment shares that can be sold, VMware said it expects to raise US$741.4 million.
Of that money, a lot will disappear rapidly: US$127 million will be spent purchasing VMware headquarters from EMC, and US$350 million will pay off debt to EMC for a dividend.
Virtualization lets a single computer run multiple operating systems simultaneously in different partitions called virtual machines. That lets a single server replace several underutilized ones and, more grandly, permits an infrastructure in which running software tasks can be moved around from one server to another to adjust to changing work priorities.
Virtualization has existed for years on high-end servers--decades in the case of mainframes--but VMware has benefited by making the technology available on mainstream servers using x86 processors.
Intel's intends its investment to encourage collaboration designed to advance VMware adoption on Intel processors, Intel said in a statement Monday. In addition, the companies have formally agreed to expand joint marketing and development.
Intel will get a seat on VMware's board, the chipmaker said.
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