IBM is hunting for the next deal – specifically in hybrid cloud, automation, cybersecurity and a new sweet spot, artificial intelligence.
IBM (NYSE: IBM), which is expected to close on its buy of Apptio later this year, has more than $16 billion in cash to work with as it searches for its next acquisition. CEO Arvind Krishna said on an earnings call Wednesday that the company has “the ability to raise additional debt if we so desired.”
Big Tech M&A hunts often mean opportunities for startups in the Triangle’s growing entrepreneurial sector. But with IBM, the stakes can be high for the region, regardless of where Big Blue shops. In addition to Red Hat Tower in downtown Raleigh (which IBM acquired through its buy of Raleigh-based Red Hat), it operates a massive campus in Research Triangle Park, where it’s one of the largest employers.
The company has a history of deal-making.
In the first half of 2023 alone, it spent about $350 million to acquire six companies.
Krishna told analysts IBM has spent about $3 billion a year, “so that tells you what’s the capability and the flexibility that we have.”
IBM is looking for deals that align with its strategy and give it synergy. "Meaning can we, the combined entity, grow faster than the individuals could before,” Krishna said. For larger deals – meaning more than a few hundred million – the buy has to be accretive within two years at the latest, he said.
“So if it meets those criteria, it’s certainly an attractive proposition,” Krishna said.
Logan Purk, an analyst with Edward Jones, says it’s a good strategy.
“It’s good they’re being disciplined on price,” he said.
Purk points to AI as a big opportunity, as it’s a sector Krishna mentioned repeatedly on the call.
