Storage giant EMC has announced plans to acquire Virtustream, a cloud software and services provider, in an all-cash deal worth $1.2 billion. The company said it will merge Virtustream\’s portfolio into its Federation Enterprise Hybrid Cloud portfolio, creating a new managed cloud services business that spans all applications and all cloud models.

The all-cash-deal, which is valued at approximately $1.2 billion, is expected to close in the third quarter of this year.  Under the deal, Virtustream will continue to operate as a separate EMC federation business, with CEO Rodney Rogers reporting directly to EMC CEO Joe Tucci.

EMC calls its latest deal a “transformational element” of its overall hybrid cloud strategy. Joe Tucci, EMC CEO said in a statement that: “ Virtustream in place, EMC will be uniquely positioned as a single source for our customers\’ entire hybrid cloud infrastructure and services needs, it\’s a game changer.”

Founded in 2009 by Rodney Rogers (president and CTO) and Kevin Reid, Virtustream is a provider of cloud computing management software, infrastructure as a service and managed services to enterprises, governments and service providers. It delivers application life cycle automation and orchestration with a  particular focus on I/O-intensive mission-critical enterprise applications such as SAP S/4 HANA and others. The company\’s xStream platform is tightly integrated with VMware vSphere and architected to deliver service level agreements (SLAs) for not only infrastructure availability, but for application performance and transaction latency as well. 

Market analyst Gartner has recognized Virtustream in the recent 2015 Gartner Magic Quadrant for Cloud Infrastructure as a Service, one of the few independent companies to reach this status worldwide in public cloud IaaS category. In addition, the company also received the 2012 North American Hybrid Clouds product Line Strategy Award from Frost & Sullivan and was listed in the 2011 Red Herring Global 100.

Before the acquisition, Virtustream has raised approximately $40 million in Series A funding round from Columbia Capital, Blue Lagoon Capital, Intel Capital, Noro-Mosoley Partners and TDF between 2009 and May 2010, and $15 million in Series B funding in July 2011 from Intel Capital, Columbia Capital, Noro-Mosolley Partners, TDF and QuestMark Capital. It customers include Domino Sugar, Heinz, Hess Corporation, Kawasaki, Lexmark, Scott Miracle-Gro and The Coca-Cola Company. 

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