06:29 AM EDT, 04/25/2024 (MT Newswires) -- International Business Machines ( IBM ) agreed to purchase multi-cloud infrastructure automation company HashiCorp ( HCP ) in a deal with an enterprise value of $6.4 billion, while the tech giant's first-quarter revenue fell short of market expectations.

The computer hardware and software firm will pay $35 a share in cash for HashiCorp ( HCP ), as part of its efforts to strengthen its hybrid cloud and artificial intelligence offerings, the companies said in a statement late Wednesday. IBM ( IBM ) plans to finance the acquisition with cash on hand.

The transaction, which requires approval from regulators as well as HashiCorp's ( HCP ) shareholders, is expected to close by the end of the year. Stockholders and investors that collectively own 43% of HashiCorp ( HCP ) have voted in favor of the deal. IBM's ( IBM ) shares dropped 8.5% in Thursday's premarket activity, while HashiCorp ( HCP ) gained 4.7%.

"Combining IBM's ( IBM ) portfolio and expertise with HashiCorp's ( HCP ) capabilities and talent will create a comprehensive hybrid cloud platform designed for the AI era," IBM ( IBM ) Chief Executive Arvind Krishna said in the statemen

IBM ( IBM ) sees the deal boosting adjusted earnings before interest, taxes, depreciation, and amortization within the first year of its completion. It also expects HashiCorp ( HCP ) to drive synergies across growth areas, such as Red Hat and IT automation, and expand its hybrid and multi-cloud offerings to clients.

Separately, IBM ( IBM ) reported adjusted earnings of $1.68 per share for the quarter ended March, up from $1.36 the year before, topping the Capital IQ-polled consensus of $1.59. Revenue ticked up 1% to $14.46 billion, but was just shy of the Street's view for $14.54 billion.

Revenue in the software segment moved 5.5% higher to $5.9 billion as hybrid platform and solutions rose 6%, while transaction processing increased 3%. Consulting sales edged down 0.2% to $5.19 billion and the infrastructure business decreased 0.7% to $3.08 billion.

The company continues to see constant currency revenue growing in line with its mid-single-digit model for 2024. Currency is now set to be a one-and-a-half to two-point headwind to revenue growth at current rates, compared with its prior guidance for one-point negative impact.

"For the second quarter, I expect our constant currency revenue growth rate to be consistent with the full year," Chief Financial Officer James Kavanaugh said on an earnings call, according to a Capital IQ transcript. "And for profit, we expect the first half skew of net income will remain a couple of points ahead of the prior year."

Price: 168.73, Change: -15.37, Percent Change: -8.35