IBM to Acquire Software Provider Turbonomic for Over $1.5 Billion

IBM said on Thursday it has agreed to acquire Turbonomic, a provider of software that helps companies monitor the performance of their business applications, the latest in a series of cloud computing acquisitions by the tech giant.

The transaction values Turbonomic at between $1.5 billion (roughly Rs. 11,100 crores) and $2 billion (roughly Rs. 14,800 crores), people familiar with the matter said on condition of anonymity. The deal, which confirmed an earlier Reuters report, would be IBM's largest since it acquired Red Hat for $34 billion (roughly Rs. 2,51,650 crores) in 2019.

IBM shares were up slightly in early afternoon trading.

The acquisition is IBM's 11th since Arvind Krishna became chief executive last year. Krishna has been leading a major transformation, doubling down on the hybrid cloud and artificial intelligence areas.

"Turbonomics is the next piece in our strategy around automation," said Rob Thomas, SVP of IBM Cloud and Data Platform. "We can bring distribution advantage plus integrating it into our AI ops strategy.

IBM plans to integrate Turbonomic's Application Resource Management software with Instana and its other recent acquisitions, as well as keeping partnerships with Cisco following the transaction.

Boston-based Turbonomic provides companies with software to boost the real-time performance and compliance of their applications. It last raised $70 million (roughly Rs. 520 crores) from Trend Forward Capital and Highland Capital Partners at a valuation of $963 million (roughly Rs. 7,130 crores) in September 2019, according to PitchBook Data. Other backers of the company include Bain Capital Ventures and Cisco.

Turbonomic has previously partnered with IBM, including an original equipment manufacturer (OEM) agreement in May 2020.

Turbonomic reported 41 percent revenue growth for the 2021 fiscal year, as it benefited from customers accelerating their application transformation to the public cloud during the coronavirus pandemic.

The transaction is expect to close in the second quarter of 2021.

© Thomson Reuters 2021