Bellevue-based software company Apptio, which helps clients monitor their technology spending, is set to be acquired by tech giant IBM (NYSE: IBM) in a $4.6 billion cash deal.
The acquisition, announced Monday, will provide Apptio with additional resources and reach, co-founder and CEO Sunny Gupta said.
The deal is expected to close in the latter half of this year.
Gupta said IBM plans to expand Apptio's roughly 1,400-person team after the deal closes, though details are still to be worked out.
"I think of this as halftime of a football game," Gupta said. "It's not the end. It's not the start. We finished an amazing first half, and I really still think the best years for Apptio are yet to come."
Gupta said all Apptio employees will join IBM as part of the deal. He doesn't yet know what will happen to the Apptio brand, but he noted that Red Hat has kept its brand after being acquired by IBM for $34 billion in 2019.
Apptio downsized its office space in Bellevue by 28,000 square feet last year. Gupta said the company plans to keep its current space in Bellevue. Although IBM and Apptio are still early into the integration, he added, given that IBM is investing in Apptio's growth, Apptio could need more space eventually.
Apptio, founded in 2007, makes products aimed at helping clients get the most out of their tech investments. Its clients include Bank of America, FedEx and Allstate.
Apptio went public in 2016 but was taken private when Vista Equity Partners acquired the company for $1.94 billion in 2019. Gupta said Vista Equity has been a great investor and partner to Apptio. In December, Apptio acquired the cloud cost savings company Cloudwiry, headquartered in Austin, Texas, for an undisclosed amount.
IBM, headquartered in Armonk, New York, generated $14.3 billion in revenue during the first quarter, up from $14.2 billion in the first quarter of 2022. The company, which has clients in more than 175 countries, offers services in artificial intelligence, cloud solutions and consulting.
According to a news release, acquiring Apptio will give IBM $450 billion of anonymized IT spending data, and the acquisition will benefit IBM's automation and consulting services.
Gupta said he met IBM CEO Arvind Krishna a few years ago and the two hit it off. After talking about partnering, Gupta said IBM at the beginning of this year started to feel like it would be better if Apptio joined IBM. Talks heated up in late spring and really gained momentum over the past month.
"(IBM) really felt like this was one of the transformational things they needed to do," Gupta said. "They just thought it was a long-term strategic bet for their portfolio."
