Breakdown of Cloud Computing Services (Photo credit: Wikipedia)
Open Stack cloud services company, SoftLayer, seems to be doing the acquisition dance with a couple of suitors at the moment. One of those interested parties – perhaps the one more likely to make an offer – is IBM.
Also interested in acquiring the Dallas, Texas-based SoftLayer is (or was) EMC, the Massachusetts-based information management and storage firm. According to a report by Barb Darrow, an industry analyst and senior writer with GigaOm, IBM may be the only seriously interested party. Virtualization company, VMware, will be emerging with a cloud infrastructure services product sometime this year and, since EMC (NYSE:EMC) owns VMware (NYSE:VMW), it doesn’t really need to spend any extra money to acquire what SoftLayer has to offer.
IBM’s interest in the cloud services firm stems from lack confidence in its own ability to develop such a product itself, according to Darrow’s report . The company is also thinking about Rackspace as a target that could satisfy its cloud services needs. Rackspace, on the other hand, will require a more costly investment, at a market cap of over $7.3+ billion (as of midday, March 18th). SoftLayer could sell for over $2 billion, according to sources close to the matter.
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Ultimately, IBM (NYSE:IBM) will have to evaluate whether the additional capital will be worth it. “They were more interested in Rackspace,” Darrow told Forbes. “Softlayer gets them a lot of the way for less money.”
Similar companies that have been acquired for billion dollar price tags include Savvis, which was acquired by CenturyLink for $2.5 billion in 2011; and Verizon bought Terremark for $1.4 billion that same year.
SoftLayer is prepping for a transaction and the company has hired Morgan Stanley and Credit Suisse to handle the process.
