IBM Acquires Sterling Commerce Unit for $1.4 Billion

Strategic Insights -

IBM Corp. is acquiring Sterling Commerce unit from AT&T Inc. in a deal worth $1.4 billion, marking IBM's largest acquisition since the Cognos purchase in 2008. Sterling Commerce operates collaboration networks facilitating business-to-business commerce, with a client base of 18,000 companies worldwide and enabling over 1 billion deals annually. The acquisition will see IBM integrate Sterling's technology to enhance its own software offerings, while AT&T expects a one-time gain of approximately $750 million upon the deal's closure in the second half of the year.

Key Takeaways:

  • IBM is acquiring Sterling Commerce unit from AT&T Inc. for $1.4 billion, marking its largest acquisition since Cognos in 2008.
  • Sterling Commerce operates collaboration networks facilitating business-to-business commerce, with 18,000 clients worldwide and enabling over 1 billion deals annually.
  • The acquisition expands IBM's software offerings, particularly in the area of business-to-business commerce and supply chain management.
  • AT&T's stake in Sterling was valued at $3.9 billion when it acquired the unit in 2000, and the company will likely recoup most of its investment through the sale to IBM.
  • TBExCTop, chairman of IBM Corp., stated that the acquisition will provide IBM with a unique position in the business-to-business commerce market.
  • Sterling Commerce will maintain its brand identity under IBM and continue to focus on developing innovative solutions for its clients.

Statistics:

  • The acquisition price of $1.4 billion represents IBM's largest purchase in eight years, following the Cognos acquisition in 2008.
  • Sterling Commerce has 18,000 clients worldwide, across various industries including H.J. Heinz Co., Motorola Inc., Boise Cascade LLC, and Boston Market Corp.
  • The unit enables over 1 billion deals annually, solidifying AT&T's stake in Sterling as a valuable asset despite its diminishing role.
  • AT&T expects a one-time pretax gain of approximately $750 million upon the deal's closure in the second half of the year.

Sources:

  • IBM Corp.
  • AT&T Inc.
  • Euclid Infotech Pvt. Ltd., Syndigate.info, and Albawaba.com