IBM has announced plans to buy back more than $3.5 billion in its businesses and the shares of its global investment arm, the IBM Group.
The deal, which will close this year, includes IBM’s data center and software businesses, its healthcare businesses, and its information technology operations.IBM said it would make the investment on a non-recourse basis and would repay the loans with cash over the next 12 months.
The $3-billion purchase is the first of its kind by a global corporate giant.
It will be used to fund future investments in the company’s businesses and also to pay down debt and pay dividends to shareholders, the company said in a statement.IBMA, which has been on a downward spiral since it was spun off from Microsoft Corp. in 2009, has been facing a string of setbacks in its efforts to build a new business in cloud computing, which is increasingly becoming a critical component of cloud-based applications.
The company has struggled to get its own business on the road to becoming a profitable one.IBMC is seeking to acquire a number of businesses, including its global cloud computing unit, which includes the $300 million IBM Watson Group, IBM’s Watson Technology Center and IBM Global Cloud.
The acquisition of the Watson Group is a potential deal for IBM to compete with Amazon, Google Inc. and Microsoft Corp., among others, which have acquired or spun off their own data centers and businesses.IBMG will pay $3,750 per share for the Watson business and will also pay $5 per share in cash for the remaining IBM businesses, according to the announcement.IBI will retain a 10 percent stake in the Watson Business, according the statement.
IBM said it is in discussions with the Watson management team about possible strategic alternatives.
The purchase will bring IBM’s global investment assets to $4.2 trillion.IBMD was founded in 2003 and is one of the largest private equity firms in the world.
It owns a portfolio of companies including the investment bank Morgan Stanley, which provides financial services and has helped to save and invest billions of dollars for individuals and companies.
The firm is also one of several large private equity companies that recently agreed to buy $100 billion of companies, including Goldman Sachs Group Inc., BlackRock Inc. (BX) and State Street Corp. (STX).