International Business Machines (IBM) has announced its acquisition of HashiCorp in a deal valued at US$6.4 billion, signaling a strategic move to bolster its cloud-based software offerings and capitalize on the surging demand for AI-powered solutions. The acquisition comes as IBM seeks to leverage cloud technologies to address the growing need for storing and processing vast amounts of data used in artificial intelligence applications.
Under the terms of the deal, IBM will pay US$35 per share for HashiCorp, representing a substantial premium to its recent closing price. The acquisition, expected to close by the end of 2024, will be financed through cash on hand and is projected to enhance IBM’s adjusted core profit within the first year.
Based in California, HashiCorp specializes in cloud infrastructure automation, enabling customers to establish and manage their infrastructures seamlessly. Analysts view the acquisition as a strategic move that will complement IBM’s existing Red Hat business and serve as a catalyst for growth in cloud infrastructure automation.
Despite challenges in its consulting segment due to cautious spending by enterprises, IBM’s software revenue witnessed a notable 5.5% growth in the first quarter. The company’s focus on expanding its cloud business aligns with the evolving market dynamics and increasing demand for AI-driven solutions.
With the acquisition of HashiCorp, IBM aims to strengthen its position in the cloud software market and capitalize on the growing opportunities presented by the digital transformation landscape. As the demand for cloud-based solutions continues to rise, IBM’s strategic investment in HashiCorp underscores its commitment to driving innovation and delivering value to customers worldwide.
