Dive Brief:
- IBM will acquire Advanced’s mainframe modernization division, the company announced Thursday. While the financial details remain undisclosed, IBM expects the deal to close by the end of Q2.
- The acquisition will deepen IBM Consulting’s bench of mainframe expertise across financial services, insurance, automotive and other industries and expand the company’s application modernization capabilities, according to the announcement.
- The move aligns with IBM’s broader business strategy to prioritize solutions and consulting services that help enterprises integrate on-prem with cloud, manage hybrid ecosystems and deploy new capabilities, including watsonx Code Assistant for Z application refactoring tools, across platforms.
Dive Insight:
Acquisitions have played a major role in IBM’s business strategy reboot under Chairman and CEO Arvind Krishna's plan to modernize the business.
Krishna oversaw the company’s $34 billion acquisition of open source software leader Red Hat in 2020, and he has continued to actively seek M&A opportunities. In August, IBM closed on a $4.6 billion deal to purchase IT management software company Apptio, a move the company announced last June.
“Apptio's offerings, combined with IBM's IT automation software and our AI capabilities, will give clients the most comprehensive approach to optimize their IT environments,” Krishna said during a July earnings call.
The company spent roughly $5 billion on acquisitions through the first nine months of 2023, Jim Kavanaugh, IBM’s SVP and CFO, said in October, during a Q3 earnings call, and capped off 2022 with eight acquisitions across software and consulting.
The Advanced announcement marks the company’s first acquisition of the year, IBM said. The company has made 35 acquisitions since April 2020, when Krishna’s leadership tenure began.
