- IBM said it would acquire HashiCorp in a deal valued at $6.4 billion, expanding its cloud-based software offerings.
- Software has been a bright spot for IBM as its consulting business grapples with more cautious spending by companies in response to higher interest rates.
- The company has doubled down on its cloud business as it becomes increasingly necessary to store and process the vast amounts of data used in artificial intelligence programs.
Bought on the AI wave
IBM Corp said on Wednesday it will acquire HashiCorp in a deal worth $6.4 billion, expanding its cloud-based software products to take advantage of a boom in demand driven by artificial intelligence.
Software has been a bright spot for IBM as its consulting business grapples with more cautious spending by companies in response to higher interest rates.
IBM will pay $35 per share for HashiCorp, a 42.6% premium to Monday’s closing price. Shares of HashiCorp surged on Tuesday after media reports of the deal talks.
Shares of HashiCorp rose more than 4% in extended trading on Wednesday, while IBM fell 7% as the company separately reported first-quarter revenue that was slightly below expectations.
“You see customers in this uncertain macroeconomic environment. You’re seeing customers tightening up on discretionary spending, “Chief Financial Officer Jim Kavanaugh said.
Also read: IBM, Fortinet launch next-gen firewall security for IBM Cloud
Doubling down on cloud business
Accenture cut its revenue forecast for fiscal 2024 in March as clients limit spending on their consulting services.
IBM’s software business grew 5.5% in the first quarter. The company has doubled down on its cloud business as it becomes increasingly necessary to store and process the vast amounts of data used in artificial intelligence programs.
The Blues’ “AI business ledger” surpassed $1 billion in the first quarter, increasing sequentially. The book includes actual sales and pre-orders of various products.
IBM said the acquisition of HashiCorp will be funded from cash on hand and will be accretive to adjusted core earnings in the first full year after the deal closes, which is expected by the end of 2024.
