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Market Update

IBM to Acquire Privately Held SoftLayer to Expand Cloud Services

Author: Devan Biswas
Last Update: 12:22 PM ET June 04 2013

IBM Corp agreed to acquire privately held SoftLayer Technologies, Inc that valued the company at $2 billion as the company strengthens its presence in cloud computing for enterprises and small businesses.

SoftLayer in an emailed statement to Ticker.com announced the deal and highlighted the company’s progress since its inception in 2005.

The privately held data center manager is based in Dallas, Texas and operates 13 data centers in the U.S., The Netherlands and Singapore.

SoftLayer as recently as 2010 had 6,000 clients and has been growing through acquisition and the number of clients has jumped to 21,000 and generated revenues of at least $320 million according to the sources in the company. The company has struggled with profits with significant capital expenditures.

The $2 billion price paid by IBM is a rich multiple for a hosting company that has anemic profitability record.

IBM projected its cloud services to generate revenues of $7 billion by 2015 and with the acquisition the technology company plans to serve smaller businesses by offering public cloud services and competing with Amazon.

In recent years, IBM has gained traction among larger businesses by offering private and on-premise cloud computing services.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc