IBM has reached a definitive agreement to sell seven of its software products to HCL Technologies for $1.8 billion (£1.4 billion).
The deal comes after IBM’s Ginni Rometty pledged to divest assets following a $34 billion acquisition of Red Hat.
Live: #IBM call on #RHT acquisition. Q: Will you put #Watson etc. on Red Hat stack? Any divestitures planned? Ginni Rometty: "1: Yes. 2: Won't be shy about divesting what we need to divest. My tenure's been $8b of divestitures."
— Ed Targett (@editortargett) October 29, 2018
Currently the two companies have an ongoing IP partnership in relation to five of the products; the deal is expected to be finalised in 2019.
C Vijayakumar, President & CEO, HCL Technologies commented in a release: “We continue to see great opportunities in the market to enhance our Mode-3 (Products and Platforms) offerings. The products that we are acquiring are in large growing market areas like Security, Marketing and Commerce which are strategic segments for HCL.”
“Many of these products are well regarded by clients and positioned in the top quadrant by industry analysts.”
The seven products acquired by HCL technologies are:
- Appscan for secure application development
- BigFix for secure device management
- Unica (on-premise) for marketing automation
- Commerce (on-premise) for omni-channel eCommerce, Portal (on-premise) for digital experience
- Notes & Domino for email and low-code rapid application development
- Connections for workstream collaboration.
HCL & IBM
HCL and IBM claim that these software products represent a market of over $50 billion.
HCL’s CEO Vijayakumar commented that: “The large-scale deployments of these products provide us with a great opportunity to reach and serve thousands of global enterprises across a wide range of industries and markets.”
“We see tremendous potential for creating compelling ‘as-a-service’ offerings by combining these products with our Mode-1 and Mode-2 services.”
The deal is also a clear indication of the strategic intent of IBM as they look to increase their foothold and impact in the hybrid cloud and cybersecurity market.
Recently IBM purchased open source and container specialists Red Hat for $34 billion, making the company the world’s biggest hybrid cloud provider.
John Kelly IBM SVP of Cognitive Solutions and Research commented: “Over the last four years, we have been prioritizing our investments to develop integrated capabilities in areas such as AI for business, hybrid cloud, cybersecurity, analytics, supply chain and blockchain as well as industry-specific platforms and solutions including healthcare, industrial IOT, and financial services.”
“We believe the time is right to divest these select collaboration, marketing and commerce software assets, which are increasingly delivered as stand-alone products. At the same time, we believe these products are a strong strategic fit for HCL, and that HCL is well positioned to drive innovation and growth for their customers.”