IBM to buy Software AG's enterprise tech business for $2.3 bn

IT software and consultancy services provider IBM announced on Monday that it will purchase Software AG's enterprise technology platforms for 2.13 billion euros ($2.33 billion) in order to enhance its artificial intelligence (AI) and hybrid cloud offerings. The acquisition will be made using IBM's available cash on hand and will include Software AG's StreamSets and webMethods platforms.

According to both companies, the addition of StreamSets will provide data ingestion capabilities to IBM's AI and data platform, WatsonX. On the other hand, webMethods will offer IBM's clients and partners’ additional integration and API management tools for their hybrid multi-cloud environments.

Rob Thomas, Senior Vice President of Software and IBM's Chief Commercial Officer, said that the combination of WatsonX, StreamSets, and webMethods will enable clients to fully unlock the potential of their applications and data. He also emphasized that this powerful combination will drive innovation and prepare businesses for AI, regardless of where their applications or data are located.

The acquisition is expected to provide IBM's clients and partners with one of the most modern and comprehensive application and data integration platforms in the industry.

Software AG, majority owned by private equity firm Silver Lake, has over 5,000 employees across more than 70 countries and generates annual group revenue of over €950m (US$1.04bn). Its technology plays a crucial role in integrating applications, devices, data, and clouds, streamlining processes, and connecting sensors, devices, and machines.

As organizations continue to accelerate their digital transformations, application and data integration solutions become increasingly important for application modernization and effective AI deployment across the enterprise. StreamSets and webMethods are leaders in application integration, API management, and data integration. According to IDC, the worldwide integration software market is predicted to surpass US$18bn in 2027, with a compound annual growth rate of 16.1%.

This pending acquisition builds upon the more than 20-year relationship between IBM and Software AG. Both StreamSets and webMethods are expected to complement IBM's current portfolio, which includes WatsonX, Red Hat, IT automation products, and IBM Consulting.

Sanjay Brahmawar, Chief Executive Officer of Software AG, said that IBM is the perfect fit for webMethods and StreamSets. He stated that with IBM's global scale and focus on hybrid cloud and AI, their employees will have a great opportunity to develop while assisting enterprises worldwide in maximizing the value of their applications and data.

In its third quarter 2023 earnings results announced in October, IBM's revenue increased 4.6% year-over-year to $14.8 billion, or 3.5% at constant currency. Net income reached $1.70 billion, or $1.84 per share, compared with a net loss of $3.20 billion, or $3.54 per share, in the same quarter one year ago.