Virtualization and cloud infrastructure provider VMware (NYSE: VMW), announced this week that it will pay $1.05 billion in cash plus approximately $210 million in assumed unvested equity awards to acquire Nicira, a software-defined networking (SDN) specialist and provider of network virtualization for open source initiatives.

“This move shows the company’s interest in SDN solutions and that this technology is in demand,” said Dan Pitt, executive director at Open Networking Foundation, speaking to press members at NetEvents Americas Press & Summit, held in Miami this week.

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In a statement, VMware CEO Paul Maritz, explained that this would be an opportunity for VMware, which has led the server virtualization revolution, to do the same for data center and cloud networking.

Nicira CEO Steve Mullaney said that he is thrilled to be joining forces with VMware to help build the software-defined data center, since Nicira helps customers improve business velocity and efficiency by transforming how networking works in the cloud era.

“It is a way to differentiate themselves from competitors, and it is indicative of the importance of network virtualization. We might see more [purchases like this],” said Pitt, whose foundation promotes the rethinking of networks and the acceleration of the delivery and use of SDN technologies and standards.

The acquisition is subject to regulatory approvals and other customary closing conditions. The parties expect the deal to close during the second half of the year. The boards of directors of both VMware and Nicira as well as Nicira’s stockholders have approved the acquisition.