Last week, Palo Alto, California-based software company VMware announced plans to purchase cybersecurity firm Carbon Black for $2.1 billion. Furthermore, the company revealed that it intends to buy application development company Pivotal Software for $2.7 billion. The corporation plans to complete both of its acquisitions by January 2020.

Why VMware is Buying Carbon Black

VMware’s core business is selling cloud computing and virtualization software. Indeed, the firm is regarded as the world’s leading provider of data center hypervisors. But to maintain its market dominance, the company needs to ensure that its clients’ information is secure. Accordingly, the firm is spending billions to acquire Carbon Black, a cybersecurity concern that specializes in cloud-native endpoint protection.

Founded in 2008, Carbon Black has made its name on providing holistic protection for its customers. Its predictive cloud security platform offers cutting edge next-generation antivirus, threat hunting, application control, and system lockdown features that stop malware from inflicting critical damage.

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The New England-based firm’s robust offerings allowed it to achieve remarkable success. Before its acquisition, the firm counted Adobe, DocuSign, and Samsung among its customers. The company also brought in an estimated $234.2 million in annual revenue.

Why VMware is Buying Pivotal

Like Carbon Black, Pivotal Software also operates in the cloud sector, but it offers enterprise app development platform. Its flagship product is an open-source software-as-a-service (SaaS) called Cloud Foundry. With it, organizations can bring their branded programs through the full app development cycle. Moreover, the platform’s container architecture allows developers to run their apps in a variety of different languages.

A subsidiary of VMware that spun off in 2012, Pivotal is a service provider to major brands Ford, Kroger, and NBCUniversal. Despite its pedigree and impressive client list, the firm had been struggling as of late. Its shares had been trading at around half of its 2018 IPO price, and it posted a $31.7 million loss in the last quarter. However, Pivotal’s stock surged by 8.6 percent once the news of its acquisition went live.

VMware CEO Pat Gelsinger told TechCrunch the two purchases would give his company the ability to offer enterprise-grade application development and attendant cybersecurity protection. “With these actions we meaningfully accelerate our subscription and SaaS offerings and expand our ability to enable our customers’ digital transformation.”

Though VMware just spent $4.8 billion to diversify its portfolio, the company is unlikely to encounter near-term cash flow problems. In tandem with its acquisition announcements, the firm revealed it earned $2.44 billion in the last quarter, an increase of 12 percent year-on-year.

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