IBM toAquire Software Company Apptio for $4.6 Billion to Strengthen Cloud Offerings

IBM announced that it will acquire Apptio, a technology spend-management platform, from Vista Equity Partners for $4.6 billion in cash. This move is part of IBM's strategy to strengthen its capabilities in cloud computing and automation. The deal is expected to be financed with cash on hand and is anticipated to close in the latter half of 2023.

The acquisition comes at a time when many companies are reducing their technology budgets due to challenging macroeconomic conditions. IBM itself had to cut around 3,900 jobs earlier this year and reported a modest year-over-year increase in revenue in the March quarter.

Apptio, a software-as-a-service business, has a broad customer base of over 1,500 companies and partnerships with major cloud providers such as Amazon Web Services and Salesforce. IBM believes that the acquisition will benefit its Red Hat business, AI portfolio, and consulting business.

IBM's Senior Vice President, Rob Thomas, expressed the company's openness to further mergers and acquisitions in the software and consulting space. In recent years, IBM has been realigning its focus towards newer technologies like AI and cloud computing. This includes the acquisition of Red Hat for approximately $34 billion in 2019, as well as the spinoff of its IT infrastructure and data-center business, Kyndryl Holdings, earlier this year.

Apptio, based in Seattle and founded in 2007, provides services to help companies manage and analyze their spending on cloud services. Its offerings include IT budgeting, forecasting, and financial analysis. Prior to the acquisition, Apptio was taken private by Vista Equity Partners in a $2 billion deal in 2019, a few years after the company went public.