EMC's VMware announces IPO

VMware, a subsidiary of EMC, is going public, and it hopes to raise as much as $740 million, according to a filing with the Securities and Exchange Commission.

The company, which was acquired by EMC in 2003 for $635 million, will use the proceeds from the IPO to buy down the debt it owes EMC, to buy its headquarters from EMC and for working capital.

After the IPO, EMC will continue to control VMware and own 90% of the company’s stock. The value of EMC’s stock rose from $18.66 a share to $18.84 on news of the IPO.

VMware expects to offer 33 million shares of stock priced at between $23 and $25 a share. After the IPO, VMware will offer two classes of stock. EMC will own 32.5 million Class A shares and 300 million Class B shares. VMware is expected to trade as VMW.

The company also announced that Intel Capital will invest in it. Intel will invest $218.5 million in VMware’s common stock, for a total investment of 2.5% of the company’s outstanding common stock and 1% of its voting stock. As a result of the investment, an Intel executive will be appointed to VMware’s board of directors.

In related news, VMware announced it will appoint Mark Peak, a former Amazon executive, as its CFO.

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