President of New York Stock Exchange Thomas Farley and executives from Pivotal Software ring the opening bell on the New York Stock Exchange April 20, 2018.
Brendan McDermid | Reuters
Pivotal shares increased as much as 72% in extended trading on Wednesday after VMware said it will continue with an agreement to acquire all outstanding shares in Pivotal's A share at $ 15 per share in cash, an 80.7% premium on Pivotal's $ 8.30 closing
VMware also said in a statutory filing that it has requested that Dell exchange all outstanding shares of Pivotal's B share, other than B shares owned by VMware, for VMware shares. Dell controlled almost 81
The transaction may contribute to further diversification of VMware, which has moved to partner with cloud infrastructure vendors such as Amazon to enable existing customers to run their computing workloads in the environment they want.
Shares of Pivotal have declined 66% in the last year. On June 5, the Pivotal share fell 41% after the company provided guidance that was below analysts' expectations.
Pivotal was published in April 2018. VMware and DellEMC both contributed assets when Pivotal was founded in 2013.
As a result of an agreement with Dell, VMware is the sales agent for some Pivotal products, so VMware collects cash that is then transferred. to Pivotal, after deduction of a contract fee. As of May 3, VMware had a 16% financial interest in Pivotal and 24% voting rights in the company.
In a separate statement, Pivotal said on Wednesday that although it is in talks with VMware about a "potential business combination," a deal has not been concluded.