The deal, which confirmed an earlier Reuters report, would
be IBM's largest since it acquired Red Hat for $34 billion in 2019. It values
Turbonomic at between $1.5 billion and $2 billion, people familiar with the
matter said on condition of anonymity.
IBM shares were up slightly in early afternoon trading.
The acquisition is IBM's 11th since Arvind Krishna became
chief executive last year. Krishna has been leading a major transformation,
doubling down on the hybrid cloud and artificial intelligence areas.
Boston-based Turbonomic provides companies with software to
boost the real-time performance and compliance of their applications. It last
raised $70 million from Trend Forward Capital and Highland Capital Partners at
a valuation of $963 million in September 2019, according to PitchBook Data. Other
backers of the company include Bain Capital Ventures and Cisco.
Turbonomic reported 41% revenue growth for the 2021 fiscal
year, as it benefited from customers accelerating their application
transformation to the public cloud during the coronavirus pandemic.
Turbonomic has previously partnered with IBM, including an
original equipment manufacturer (OEM) agreement in May 2020.
Following the closing of the transaction, IBM plans to
integrate Turbonomic's Application Resource Management software with Instana
and its other recent acquisitions.
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