IBM Acquires Software Company Apptio for $4.6 Billion to bolster cloud offerings

International Business Machines Corp. (IBM) will buy software company Apptio for $4.6 billion, marking the seventh acquisition this year as Chief Executive Officer Arvind Krishna pushes the company’s transformation into a hybrid-cloud and artificial intelligence business. 

IBM said in a statement on Monday that it will use available cash on hand for the transaction, which is expected to close in the latter half of 2023. Apptio is currently owned by private equity firm Vista Equity Partners, which bought it for $1.9 billion in 2019.

The deal comes at a time when companies are cutting their technology budgets amid challenging macro conditions. IBM cut about 3,900 jobs early this year and reported under 1 percent year-over-year increase in revenue in the March quarter.

The acquisition of Apptio, which has over 1,500 customers and partnerships with cloud companies from Amazon.com’s AWS to Salesforce, will benefit IBM’s Red Hat business, AI portfolio, and consulting business, the technology giant said in a statement. The deal marks the latest move by IBM as the century-old IT technology major reorients itself to focus on newer AI and cloud-based offerings.

In 2019, IBM bought software provider Red Hat for about $ 34 billion, in its biggest acquisition ever, and two years later spun off its IT infrastructure and data-center business Kyndryl Holdings. Last year, the company closed the sale of some of its healthcare data and analytics assets.

Founded in 2007, Seattle-based Apptio helps companies manage and understand their spending on cloud services and offers functionalities such as IT budgeting, forecasting, and financial analyses. Private equity firm Vista Equity Partners agreed to pay about $ 2 billion for Apptio in 2018, which was over double its market cap at the time. Apptio went public in September 2016 at $16 per share.