VMware, Inc. (NYSE:VMW) entered into a definitive agreement to acquire Carbon Black, Inc. (NasdaqGS:CBLK) from Atlas Venture L.P. and others for $2 billion on August 22, 2019. Under the terms of the merger agreement, VMware, Inc. will acquire the shares of Carbon Black, Inc. at $26 per share in cash through a tender offer. The agreement provides that at the effective time of the merger, all outstanding vested options with a per share exercise price less than the offer price than rollover options, will be cancelled and the holders will be entitled to receive the offer price in respect of each “net share” covered by such option, all outstanding unvested options relating to common stock of Carbon Black, Inc. with a per share exercise price less than the offer price held by continuing employees (rollover options), and unvested restricted stock units relating to common stock of Carbon Black, Inc. held by continuing employees will be substituted by VMware, Inc. and converted into corresponding relating to VMware, Inc.'s class A common stock, all outstanding restricted stock units relating to carbon black common stock of Carbon Black, Inc. that are not converted into awards relating to VMware, Inc.'s class A common stock will be cancelled and any restricted common stock of Carbon Black, Inc. will be cancelled and the holders will be entitled to receive the merger consideration subject to the same vesting schedule. The transaction will be funded through cash on the balance sheet and access to short-term borrowing capacity.

Upon closing, Carbon Black, Inc. will become VMware, Inc.'s Security Business Unit. If the agreement is terminated under specified circumstances, including by Carbon Black, Inc. should Carbon Black, Inc. enter into an alternative transaction with respect to a takeover proposal, Carbon Black, Inc. will be required to pay VMware, Inc. a termination fee of $70 million in cash. Thomas Hansen, Chief Operating Officer of Carbon Black, Inc., the GTM leadership team and existing org structure will stay in place with Thomas Hansen reporting to the General Manager of VMware's Security Business Unit, Patrick Morley. The transaction is subject to the condition that, prior to the expiration of the offer, the number of shares of Carbon Black, Inc. validly tendered and not properly withdrawn represent at least a majority of the shares of Carbon Black, Inc. outstanding immediately following the consummation of the offer. In addition, the transaction is subject to the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, regulatory approvals and the receipt of all other required approvals, consents or clearances under specified foreign merger control laws and VMware, Inc. having accepted for payment all shares of Carbon Black, Inc. validly tendered and not properly withdrawn pursuant to the offer. The transaction was unanimously approved by the Board of Directors of Carbon Black, Inc. and the Board of Directors of Carbon Black, Inc. resolved to recommend to the shareholders of Carbon Black, Inc. to accept the offer and tender their shares in the offer. The Board of Directors of VMware, Inc. has also approved the transaction. Morgan Stanley & Co. LLC has delivered to the Special Committee of Carbon Black, Inc. its written opinion to the effect that the offer price and the merger consideration are fair to the stockholders of Carbon Black, Inc. from a financial point of view.

The Directors, Executive officers and certain entities affiliated with Atlas Venture have entered into tender and support agreements with VMware, Inc. pursuant to which they have agreed to tender in the offer the shares of Carbon Black, Inc. beneficially owned by them, representing approximately 19.97% of the outstanding shares of Carbon Black, Inc. As of September 9, 2019, the Federal Trade Commission granted early termination of the waiting period under the HSR Act applicable to the offer. The consummation of the tender offer remains subject to regulatory approval in each of Germany and Austria and is subject to other customary conditions, including the tender of at least a majority of the shares of Carbon Black, Inc. As on October 4, 2019, the four-week waiting period contemplated by the Austrian Cartel Act expired. As a result, the last of the regulatory conditions have been satisfied. As on October 4, 2019, approximately 30.6 million shares of Carbon Black had been validly tendered and received, and not validly withdrawn, pursuant to the offer, representing approximately 41% of Carbon Black's outstanding shares. The offer shall initially expire at the end of the day that is 20 business days the commencement of the offer. The transaction is expected to close in mid-October 2019. As of August 27, 2019, the transaction is expected to close in the second half of VMware's fiscal year 2020 ending January 31, 2020. As of September 6, 2019, Mware has commenced a cash tender offer for a price of $26 per share and offer will expire on October 3, 2019. On September 26, 2019, the offer was extended to October 7, 2019, unless it is extended further in accordance with the merger agreement. The transaction will be EPS accretive in the second year.

Brandon C. Parris, Michael O'Bryan, Jessica Isokawa and Amanda Hines-Gold of Morrison & Foerster LLP acted as legal advisors for VMware, Inc. Kenneth J. Gordon, James A. Matarese, Blake Liggio, Jennifer Fay, Deborah Birnbach and Sarah Bock of Goodwin Procter LLP acted as legal advisors for Carbon Black, Inc. J.P. Morgan Securities LLC acted as financial advisor for VMware, Inc. Morgan Stanley & Co. LLC acted as financial advisor and fairness opinion provider for Carbon Black, Inc and was paid $34 million for its services, approximately $3 million of which became due and payable upon the delivery of the financial opinion and approximately $31 million of which is contingent upon consummation of the merger. Latham & Watkins advised Morgan Stanley in connection with the transaction. D.F. King & Co., Inc. acted as information agent and American Stock Transfer & Trust Company, LLC as depository bank to VMware.