Virtual investment

Intel Capital has agreed to become an investor in VMware, the Palo Alto, California developer of virtualisation software solutions that can be deployed to boost the resources of IT departments.

Intel Capital will invest $218.5m in VMware's Class A common stock, subject to customary regulatory and other closing conditions including a Hart-Scott-Rodino (HSR) review.

At the completion of VMware's planned initial public offering and upon closing of the investment, Intel will own approximately 2.5 percent of VMware's total outstanding common stock (less than one percent of the combined voting power of VMware's outstanding common stock).

Pursuant to the investment, an Intel executive is expected to be appointed to the VMware Board of Directors.

In use, VMware's virtualisation software allows multiple virtual machines with heterogeneous operating systems to run in isolation, side-by-side on the same physical machine. Each virtual machine has its own set of virtual hardware upon which an operating system and applications are loaded.

By doing so, VMware's products increase server and other resource usage, improve performance, increase security and minimise system downtime.

In addition to the investment deal, VMware and Intel are to expand their co-operative efforts around joint product development, marketing and other industry initiatives.