International Business Machines Corp., the world’s largest seller of computer services, agreed to buy SoftLayer Technologies Inc., a cloud-computing storage provider that will help it compete with Amazon.com Inc.
IBM is paying almost $2 billion for SoftLayer, according to a person familiar with the deal, who declined to be named because the financial terms aren’t being released. SoftLayer had $335 million in revenue in 2012, Chief Executive Officer Lance Crosby said in an interview.
IBM plans to combine Dallas-based SoftLayer with its SmartCloud unit to create a new Cloud Services division, helping capitalize on the market’s growth, IBM said in a statement. SoftLayer specializes in public clouds -- data-center networks that manage computing and software for businesses remotely -- a market that Amazon leads. IBM is pairing those capabilities with its private-cloud operations, which build dedicated systems for individual customers.
Starting a new division through acquisition “allows us to get focused,” said Ric Telford, IBM’s vice president of cloud services. “It’s all about acceleration. We had been building out but we saw SoftLayer and the acquisition was too compelling to pass up,” he said.
“They have the same capabilities” as Amazon, Telford said of SoftLayer.
IBM has a goal of reaching $7 billion in cloud revenue by 2015, which doesn’t change with this deal, the company said. SoftLayer serves about 21,000 customers using a network of 13 data centers in the U.S., Asia and Europe. The company started looking for suitors about a year ago and has been in talks with IBM for 6 months, Crosby said.
IBM, which started offering cloud services in 2008, has invested about $4 billion in acquisitions with a software-as-a- service component, the company said in an e-mail.
IBM, based in Armonk, New York, expects to complete the SoftLayer deal in the third quarter, setting the stage for the new division to be formed. SoftLayer is majority owned by private-equity firm GI Partners of Menlo Park, California.
Both Crosby and James Sciales, an IBM spokesman, declined to comment on a deal price.
Deutsche Bank AG served as IBM’s financial adviser, while Credit Suisse Group AG advised SoftLayer.
IBM fell 0.6 percent to $207.64 at 11:47 a.m. in New York. The shares had advanced 9.1 percent this year through yesterday.