One struggling software stock staged a major comeback on Wednesday after it made news that it’s in the process of finding a potential buyer to take it out of the public markets.
Pivotal Software (NYSE: PVTL), a company that offers its own cloud-native platform for software development, has been struggling over the past few months, having seen most of its market value wiped out. Today, however, the stock surged by 70 percent on news that its corporate parents might be buying out the company at a massive premium.
Pivotal, which went public originally as a spin off from VMware which is now majority-owned by Dell Technologies, is in discussions to potentially be acquired by VMware for $15 per share, representing almost double what the stock was trading at on Wednesday afternoon.
VMware confirmed the news with its own press release that acknowledged that there were ongoing discussions with both companies as well as Dell, which owns around 65 percent of Pivotal and over 80 percent of VMware.
“Pivotal Software, Inc. (NYSE: PVTL), a leading cloud-native platform provider, confirms that, through a Special Committee of its Board of Directors, it is in discussions with VMware, Inc. (“VMware”) regarding a potential business combination, and we are proceeding to negotiate definitive agreements with regards to a transaction in which VMware would acquire all of the outstanding shares of Class A common stock of Pivotal for cash at a per share price equal to $15.00,” read an official statement from the company. “However, a definitive agreement between Pivotal and VMware has not been executed. There can be no assurances that a definitive agreement will be executed between the parties…Pivotal does not intend to provide any further information as to developments, if any, in its discussions with VMware regarding a business combination unless and until a definitive agreement is executed.”
The news also could lead to the further diversification of VMware’s offerings, as the company has already moved to collaborate with cloud infrastructure providers like Amazon to help their existing customers. Considering Pivotal Software’s existing cloud platform product, the acquisition makes sense from a business standpoint.
Shares of Pivotal jumped by 69 percent in after-hours trading in response to the piece of news. Over the past six months, shares have declined drastically, with the stock being cut in half in early June.
While today’s gains help mitigate some of these loses, Pivotal Software still remains a difficult stock to recommend investors to partake in, only from a more speculative, short-term standpoint would you consider the stock attractive if you were planning to take advantage of future news announcements that could send the stock further soaring or plummeting.
Pivotal Software Company Profile
Pivotal Software Inc provides a cloud-native platform, It accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications.
The company generates its revenue from subscription and services. Generating, a majority revenue from the services. Geographically, it generates a majority of its revenue from the United States. – Warrior Trading News
