IBM has announced its plans to acquire Apptio, a cloud software company, in a cash deal worth $4.6 billion. The acquisition is part of IBM’s strategy to enhance its capabilities in cloud computing and automation.
The transaction, financed with cash on hand, is expected to be finalized in the latter half of 2023. This move comes as companies are facing challenging macroeconomic conditions and reducing their technology budgets. Earlier this year, IBM itself underwent a workforce reduction of approximately 3,900 jobs and reported a modest year-over-year increase in revenue.
Apptio, with its extensive customer base of over 1,500 companies and partnerships with prominent cloud providers like Amazon Web Services (AWS) and Salesforce, will bring significant benefits to IBM’s Red Hat business, AI portfolio, and consulting services. By integrating Apptio’s expertise in managing and analyzing cloud service expenses, including IT budgeting, forecasting, and financial analyses, IBM aims to strengthen its position in the market.
This acquisition is the latest step in IBM’s transformation toward focusing on emerging technologies such as artificial intelligence (AI) and cloud-based solutions. In 2019, the company acquired Red Hat, a software provider, for approximately $34 billion, marking its largest-ever acquisition. Two years later, IBM spun off its IT infrastructure and data center business, Kyndryl Holdings, to streamline its operations. Furthermore, IBM recently completed the divestiture of some of its healthcare data and analytics assets.
Apptio, founded in 2007 and based in Seattle, has gained recognition for its comprehensive cloud spending management solutions. The company enables businesses to effectively manage and analyze their cloud service expenditures. Its functionalities encompass IT budgeting, forecasting, and financial analyses.
Back in 2018, private equity firm Vista Equity Partners acquired Apptio for approximately $2 billion, more than double its market capitalization at the time. Apptio subsequently went public in September 2016 at an initial share price of $16.
By acquiring Apptio, IBM aims to strengthen its position in the cloud software market and further solidify its focus on AI and cloud-based offerings. The deal reflects IBM’s commitment to expanding its capabilities and delivering innovative solutions to meet the evolving needs of its clients in an increasingly digital landscape.