IBM Acquires Apptio for $4.6 Billion

IBM announced on Monday that it will purchase Apptio, a technology spend-management platform, from Vista Equity Partners for $4.6 billion in cash. This acquisition is part of IBM’s ongoing efforts to enhance its cloud and automation capabilities.

IBM shares were slightly lower in premarket trading. IBM said it will finance the deal with cash and expects the deal to close in the second half of 2023.

The deal came about at a time when companies are cutting their technology budgets in challenging macro conditions. IBM cut about 3,900 jobs at the beginning of this year and reported less than 1 percent year-over-year revenue growth in the March quarter.

Apptio, a software services business with more than 1,500 customers and partnerships with cloud companies from Amazon.com’s AWS to Salesforce, will benefit IBM’s Red Hat business, its AI portfolio and its consulting business, the tech giant said.

“Going forward, we will be opportunistic (in M&A) and look for opportunities in the software and consulting space,” executive vice president Rob Thomas told Reuters in an interview.

Centuries-old IBM is reorienting to focus on newer AI and cloud-based services.

In 2019, it bought software vendor Red Hat for about $34 billion, its largest acquisition ever, and two years later spun off its IT infrastructure and data center business from Kyndryl Holdings. Last year, the company stopped selling part of its healthcare information and analytics assets.

Founded in Seattle in 2007, Apptio helps companies manage and understand their cloud spending and offers functions such as IT budgeting, forecasting and financial analytics.

According to analysts at UBS, Apption had revenue of about $233 million in 2018 and is expected to grow 11-13% annually through fiscal 2022.

Private equity firm Vista Equity Partners took Apption private in a $2 billion deal in 2019, about three years after the software company went public.