Business software maker VMware is buying computer networking specialist Nicira for nearly $1.3 billion.
The deal announced Monday will expand VMware’s product line in the rapidly growing field of computer “virtualization.” The term refers to software that lowers the costs running data centers by enabling a single computer to function like multiple machines.
Nicira is a 5-year-old company that makes virtualisation software for computers working within the same corporate or government network.
VMware will pay $1.05 billion in cash, plus assume responsibility for $210 million in stock awards that Nicira had given its employees. Privately held Nicira had raised about $50 million from its early investors.
Both companies are based in Palo Alto, California.
VMware also reported second-quarter earnings that topped analysts’ estimates.