The deal also includes about $365M million in installment payments and assumed unvested equity.
VMware says the acquisition of the privately held Atlanta-based company will boost its mobile computing offerings for businesses without compromising security.
AirWatch will continue to be led by its founder and CEO John Marshall and will become part of VMware's end-user computing group.
AirWatch has more than 10,000 customers and 1,600 employees around the world.
The deal has been approved by the boards of both companies and the acquisition is expected to close late in the first quarter.
VMware Inc. shares are up more than 4 percent in premarket trading on the news.
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