IBM Nabs Mainspring for $80 Million
Page 1 of 1
Shortly after posting a first quarter net income growth of 15 percent, Armonk, N.Y.-based IBM Corp. finished hammering out a deal Thursday evening to buy consulting firm Mainspring, of Cambridge, Mass., in an all-stock transaction valued at $80 million.
In the deal, IBM will pay $4 per share in cash for all outstanding Mainspring common stock.
The play should provide a lift to Big Blue's IT strategy services division, Global Services, which boasts 150,000 professionals taking care of customers to a revenue tune of more than $33 billion in 2000.
Mainspring Chairman, President and CEO John M. Connolly will become the general manager and global head of the e-Business Strategy and Change Practice within Business Innovation Services, the consulting arm of IBM Global Services. Connolly will report to Tom Hawk, general manager for Business Innovation Services, Americas, IBM Global Services.
"The acquisition will enhance IBM's business consulting capabilities, and the synergy between Mainspring and IBM will increase our combined capabilities in working with CEOs around the world on e-business strategies," added Frank Roney, general manager for Business Innovation Services in IBM Global Services.
IBM's Tom Hawk said his firm inked the deal in response to increasing market demands for integrated business consulting and IT services.
Thursday's deal comes more than a month after a similar tech-giant-buys-consulting-practice deal in which software maker Novell Inc. scooped up Cambridge Technologies Inc. for $255 million in stock.
In a broader sense, such deals can be seen as positive as many consulting practices, including Cambridge, Razorfish and Modem Media have announced layoffs in recent months. Cambridge laid off almost 700 people, or 17 percent of its staff, before being picked up by Novell. Mainspring itself announced an unspecified number of layoffs in February.
The closing for this transaction is anticipated to occur by mid-June 2001, subject to governmental reviews and shareholder approvals.
closed down 6.3 percent at $3.20. Conversely, IBM
surged on strong first quarter results, closing up almost 8 percent at $114.47. The Armonk, N.Y.-based computing giant earned $1.75 billion, or 98 cents per diluted share, compared to net income of $1.5 billion, or 83 cents per share during the first quarter of a year ago, up 18 percent.