Intel buys stake in EMC's VMware, gets board seat

BOSTON (Reuters) - Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz). will invest about $219 million for a stake in VMware Inc. and a seat on the board of the Silicon Valley software company that parent EMC Corp. (EMC.N: Quote, Profile, Research, Stock Buzz) is taking public, the companies said on Monday.

The investment is intended to speed adoption of VMware's software technology on computers using Intel semiconductors, expanding an ongoing strategic relationship.

No. 1 chipmaker Intel will pay $23 a share for 9.5 million Class A common shares in VMware, giving it 2.5 percent of all outstanding common stock

VMware also said in a regulatory filing shedding new information on plans for its upcoming IPO that it expects to sell up to 37.95 million shares to the public for an estimated price of between $23 and $25 per share.

After the sale to Intel, the chipmaker will control less than 1 percent of voting shares because the stock is divided into two classes in which Class B shares have greater voting power, the companies said.

VMware warned in its filing with the Securities and Exchange Commission that completion of the transaction is subject to U.S. government regulatory review and that such approval is not assured

The software maker's products allow businesses to get more use out of computers by harnessing hardware resources that otherwise go wasted, using a technology known as "virtualization."

VMware software takes processing power on a business computer that isn't being used. It turns that computer into multiple "virtual" machines, reducing the amount of equipment that companies need to buy and maintain in data centers.

No. 1 software maker Microsoft Corp. (MSFT.O: Quote, Profile, Research, Stock Buzz) sells similar technology but analysts widely agree that its functionality is behind that of VMware.