IBM (NYSE:IBM) has agreed to acquire enterprise technology platforms StreamSets and webMethods from Software AG (DE:SOW) for €2.13 billion. Software AG is majority-owned by Silver Lake.
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StreamSets and webMethods are leading iPaaS (integration platform-as-a-service) platforms, specializing in application integration, API management, and data integration. This M&A move aligns with IBM’s strategic focus on investments in AI and hybrid cloud. The addition of StreamSets is expected to boost data ingestion capabilities for IBM’s AI and data platform, watsonx. Further, the company’s clients will get enhanced integration and API management tools for their hybrid multi-cloud environments with webMethods.
Importantly, the acquired iPaaS platforms offer a profitable and recurring revenue profile for IBM. Together, StreamSets and webMethods cater to over 1,500 clients globally. This acquisition builds upon a more than 20-year-long relationship between IBM and Software AG. The transaction remains subject to closing conditions and is anticipated to close in the second quarter of 2024.
IBM continues to make significant moves in the AI space. The company is a partner in a $10 billion chip research facility in New York. It recently teamed up with Meta (NASDAQ:META) and 50 other organizations to set up an industry group called AI Alliance. Last week, the company was selected by NATO to provide enhanced security visibility and asset management across all of NATO’s enterprise networks.
Is IBM a Buy, Sell, or a Hold?
Overall, the Street has a Moderate Buy consensus rating on IBM. Following a nearly 14% jump in the company’s share price over the past year, the average IBM price target of $156.71 implies a potential downside of 3.4% in the stock.
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