Updated April 25th, 2024 at 15:03 IST
IBM acquires HashiCorp in $6.4 billion deal to expand cloud offering
IBM's software business grew by 5.5% in the first quarter with the company's strategic focus on cloud services.
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IBM acquires HashiCorp: International Business Machines (IBM) announced on Wednesday its acquisition of HashiCorp in a deal valued at $6.4 billion. The move aims to expand IBM's cloud-based software offerings to capitalise on the increasing demand for AI-powered solutions.
Software has been a standout performer for IBM amidst cautious spending by enterprises in its consulting business due to higher interest rates.
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The acquisition will see IBM paying $35 per share for HashiCorp, representing a 42.6 per cent premium to Monday's closing price. HashiCorp's shares surged on Tuesday following reports of the deal talks and rose over 4 per cent in extended trading on Wednesday. However, IBM's shares fell 7 per cent as the company reported first-quarter revenue slightly below estimates, with total revenue at $14.46 billion compared to the estimated $14.55 billion.
IBM's software business grew by 5.5 per cent in the first quarter with the company's strategic focus on cloud services to accommodate the growing demand for AI-related data processing.
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The acquisition is expected to be completed by the end of 2024 and will be funded by cash on hand. HashiCorp, based in California, specialises in enabling customers to establish and manage their cloud infrastructures.
Analysts view the acquisition positively, considering HashiCorp's leadership position in the field and its complementary nature to IBM's existing portfolio.
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IBM's adjusted earnings for the quarter ended March were $1.68 per share, surpassing analysts' average estimate of $1.60 per share.
(With Reuters inputs)
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Published April 25th, 2024 at 15:03 IST