IBM To Reportedly Buy T-Systems' Mainframe Business Unit
Zacks Investment Research | Jan 13, 2019 09:01PM ET
International Business Machines Corporation (NYSE:IBM) is reportedly acquiring mainframe service business of T-Systems, per Reuters. Per IT-Zoom website (as revealed by Reuters), IBM is likely to pay 860 million euros (or approximately $986.16 million) for the acquisition.
Frankfurt, Germany-based T-Systems is engaged in providing IT services and consulting solutions worldwide. Notably, Deutsche Telekom (DE:DTEGn) holds a majority stake in the company.
Although the rumors are authenticated by few advances, there has been no official statement so far from IBM. Meanwhile, perT-Systems, the deal is subject to customary approval from anti-trust authorities.
In fact, T-Systems in a statement to Reuter, declared, “Existing customer contracts remain unaffected. T-Systems will continue to offer mainframe services, but with IBM in the future.”
Furthermore, an article in the leading German-daily, The Handelsblatt, citing an internal memo , adds weight to the rumored development. Notably, the memo states that 400 employees of T-Systems across six countries would transit to IBM around May.
The impending deal is anticipated to favor IBM’s prospects in its mainframe business.
Mainframe Cloud Computing: Key Takeaway
We may say that with the move (if it leads to fruition) IBM is aiming to enhance the prospects of its growth areas. In fact, IBM’s mainframe is doing well, lately.
Notably, IBM’s Cloud Managed Services deployed on its z mainframe systems, broadens the use of a mainframe to a secure scalable cloud platform enabling businesses to seamlessly adjust to evolving consumer needs.
IBM’s latest mainframe, the IBM z14, devised to accelerate enterprise-level workloads by offering cost-effective and secure cloud platform, is witnessing traction.
In fact, in the third quarter of 2018, IBM Z revenues increased 6% year over year on more than 20% MIPS growth, driven by broad-based adoption of the z14 mainframe.
International Business Machines Corporation Revenue (TTM)
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