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In bid to develop 'cloud' services, IBM to acquire SoftLayer

Welcome to our business and commercial law blog. Our goal is to write a post at least once a week discussing some relevant, newsworthy development that touches on commonplace business and commercial legal prinicples and is of interest to readers in Broward County.

Today, the news story that caught our attention pertains to IBM's announcement that it would acquire Web-hosting company SoftLayer Technologies. Although Florida is best known for its citrus groves and entertainment venues, it actually has a thriving technology sector, too. Thus, we thought news of this acquisition would be pertinent.

SoftLayer, which is based in Dallas, was probably an appealing target to IBM because it has the capacity and ability to offer cloud services on a very large scale. Acquiring a company that has this capability will help IBM keep up with Amazon and Microsoft, which already use cloud services to keep existing customers and attract new ones.

Financial terms of the deal were not disclosed, but some insiders have estimated the deal will be worth at least $2 billion.

To us, this deal is a good example of how some companies that are interested in exploring a new area or entering a new field of business do so by acquiring companies that already have a foothold in the industry. (Other companies, for contrast, prefer to develop their business services in-house.)

It will be interesting to see this deal, which IBM thinks will close in the third quarter, unfold. We have little doubt that this will be a delicate and complex affair that will take skill and a deft touch to carry out properly.

Source: Reuters, "IBM to buy website hosting service SofLayer," June 4, 2013

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