New York Stock Exchange President Thomas Farley and Pivotal Software executives ring the opening bell on the New York Stock Exchange April 20, 2018.
Brendan McDermid | Reuters
Pivotal shares increased 72% in expanded trading Wednesday after VMware said it will continue with an agreement to acquire all outstanding Pivotal A shares at $ 15 per share in cash, an 80.7% premium at Pivotal's $ 8.30 closing price.
VMware also said in a regulatory filing that it has requested that Dell exchange all outstanding shares of Pivotal's B share, other than Class B Pivotal shares owned by VMware, for Class A VMware shares. Dell controlled nearly 81
The transaction may contribute to further diversification of VMware, which has moved to partner with cloud infrastructure providers such as Amazon to enable existing customers to run the computing load in the environment they want.
Shares in Pivotal have fallen 66% over the past year. On June 5, the Pivotal share fell by 41% after the company provided guidance that was below what analysts expected.
Pivotal went public in April 2018. VMware and DellEMC both contributed assets when Pivotal was created in 2013.
As a result of an agreement with Dell, VMware is the sales agent for certain Pivotal products, so VMware collects cash which is then transferred to Pivotal, net after a contractual agency fee. As of May 3, VMware had a 16% financial interest in Pivotal and a 24% voting interest in the company.
In a separate statement, Pivotal said Wednesday that although it is in talks with VMware about a "potential business combination," an agreement has not been made.