Revenge of the South Bay: VMware acquires SpringSource for $420M to enhance cloud capabilities

The boring business back end of technology is still a lucrative market. Virtualization company VMware, whose software aims to let datacenter managers do more with less hardware, today announced its imminent acquisition of privately held SpringSource, a company that makes “lean software” tools used by high-level Java programmers both to speed up their application development and to cut costs.

Web 2.0 execs, here’s the punchline: The deal is valued at $420 million, of which $362 million will be in cash.

For SpringSource, which raised $10 million in 2007 and another $15 million in 2008, it’s a glorious exit for funders Benchmark and Accel.

Execs from the two companies weren’t available for comment, but in a prepared statement, they noted that “SpringSource has established a presence in a majority of the Global 2000 companies.” Now, VMware and SpringSource say they’ll work together to build a platform that can be hosted either at customers’ datacenters, or by cloud service providers.

Update: Accel partner Kevin Efrusy emailed me on what this means to his firm: “We’re starting to see the beginnings of some renewed momentum in the Accel portfolio, and some acquisition interest across several areas of our portfolio,” he said. “Of course, when it makes sense, we would prefer to drive towards IPO.”

But in this market, a half-billion-dollar acquisition by VMware is just fine.