Acquisitions/Divestitures

9 Months Ended

Sep. 30, 2011

Acquisitions/Divestitures

Acquisitions/Divestitures

11. Acquisitions/Divestitures:

Acquisitions: During the nine months ended September 30, 2011, the company completed one acquisition: in April, the company acquired 100 percent of TRIRIGA, Inc. (TRIRIGA), a privately held company.  TRIRIGA is a provider of facility and real estate management software solutions, which help clients make strategic decisions regarding space usage, evaluate alternative real estate initiatives, generate higher returns from capital projects and assess environmental impact investments. The acquisition adds advanced real estate intelligence to the company’s smarter buildings initiative. TRIRIGA will be integrated into the Software and Global Business Services segments. Purchase price consideration for the acquisition is paid primarily in cash.

The acquisition was accounted for as a business combination using the acquisition method, and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity were recorded at their estimated fair value at the date of acquisition. The acquisition did not have a material impact in the Consolidated Financial Statements.

On October 21, 2011, the company announced that it had completed the acquisition of Algorithmics, Inc. (Algorithmics). Algorithmics, a privately held company, is a risk analytics firm with operations in Toronto, Canada.  Algorithmics’ risk analytics software, content and advisory services are used by banking, investment and insurance businesses to help assess risk, address regulatory requirements and make more insightful business decisions. This acquisition expands the company’s business analytics capabilities in the financial services industry. At the date of issuance of the financial statements, the initial purchase accounting was not complete for this acquisition.

On October 4, 2011, the company announced that it had entered into a definitive agreement to acquire Q1 Labs, a privately held company based in Waltham, Massachusetts. Q1 Labs is a provider of security intelligence software and will accelerate the company’s efforts to help clients more intelligently secure their enterprises by applying analytics to correlate information from key security domains and creating security dashboards for their organizations. The acquisition is expected to close in the fourth quarter of 2011.

On October 5, 2011, the company announced that it had completed the acquisition of i2, a privately held company based in Cambridge, United Kingdom, with its U.S. headquarters in McLean, Virginia. i2 expands the company’s big data analytics software for smarter cities by helping both public and private entities in government, law enforcement, retail, insurance and other industries access and analyze information they need to address crime, fraud and security threats.  At the date of issuance of the financial statements, the initial purchase accounting was not complete for the i2 acquisition.

On October 11, 2011, the company announced that it had entered into a definitive agreement to acquire Platform Computing, a privately held company headquartered in Toronto, Canada. Platform Computing is a global leader in cluster and grid management software for distributed computing environments. Platform Computing helps clients manage shared computing environments that are used in resource- intensive applications such as simulations and analytics. The acquisition is expected to close in the fourth quarter of 2011.

Divestitures: During the second quarter of 2011, the company completed two divestitures related to subsidiaries of IBM Japan. The impact of these transactions was not material to the company’s Consolidated Financial Statements.

On March 31, 2010, the company completed the sale of its activities associated with the sales and support of Dassault Systemes’ (Dassault) product lifecycle management (PLM) software, including customer contracts and related assets to Dassault. The company received net proceeds of $459 million and recognized a net gain of $591 million on the transaction in the first quarter of 2010. The gain was net of the fair value of certain contractual terms, certain transaction costs and the assets and liabilities sold. The gain was recorded in other (income) and expense in the Consolidated Statement of Earnings and the net proceeds were reflected in proceeds from disposition of marketable securities and other investments within cash flow from investing activities in the Consolidated Statement of Cash Flows.