IBM Confidential - Not for distribution to customers
Q1. What is the announcement?
A1. Today, IBM and Centerbridge Partners L.P. announced a definitive agreement in which Centerbridge will acquire the following IBM marketing platform and commerce software offerings:
- Campaign Automation
- Marketing Assistant
- Media Optimizer
- Customer Experience Analytics
- Content Hub
- Real-Time Personalization
- Personalized Search
- Universal Behavior Exchange
- Intelligent Bidder
- Price & Promotion Optimization
- Payments Gateway
The transaction is expected to close mid-2019, subject to the satisfaction of applicable regulatory reviews, labor relations processes, and customary closing conditions.
Financial terms and conditions were not disclosed.
Q2. Who is the new owner/What is the new company?
A2. Centerbridge is a private investment management firm employing a flexible approach across investment disciplines – from private equity to credit and related strategies, and real estate – in an effort to find the most attractive opportunities for our investors and business partners. Centerbridge is dedicated to partnering with world-class management teams across targeted industry sectors and geographies to help companies achieve their operating and financial objectives
Q3. Where will this new company operate?
A3. The new company serves over 2,900 customers in over 70 countries and have a sizable global footprint in the market.
Q4. Why is IBM selling these solutions?
A4. The longevity of IBM's more than 100-year history lies in its ability to transform to anticipate and meet the evolving needs of our clients. IBM is focused on the emerging, high-value segments of the IT industry, and we have an integrated model that prioritizes innovation and expertise such as AI, blockchain, supply chain, quantum and more.
In particular, our focus on supply chain has become a priority for our organization. We know supply chain is ripe for applying disruptive emerging technologies such as AI, blockchain and IoT to improve supply chain automation, visibility, operations, and performance. Our Order Management, Order Optimizer, Inventory Visibility and Store Engagement solutions, and our Supply Chain Business Network are all helping clients to make smarter decisions in real time. And it is here that we plan to invest going forward to create leading edge innovation.
At the same time, our clients derive great value from our marketing and commerce offerings. Therefore, we decided it was time to entrust them to a new entity that can continue to infuse them with investment and propel further innovation. IBM and Centerbridge share a vision for the future of these marketing and commerce related offerings to continue to help our clients transform how their customers experience their products through continued innovation and performance optimization.
IBM is confident that Centerbridge is the right provider for these offerings and we look forward to seeing these products' market leadership position continue and expand. For more information on IBM’s supply chain business: https://ibm.co/2SQZx2u
Q5. Is IBM exiting the marketing and commerce SaaS and software market?
A5. Yes, IBM will no longer offer a full portfolio of marketing and commerce SaaS products and solutions.
IBM will, however, continue to provide various AI solutions for the marketing and commerce professional, marketing transformation and consulting services to the market such as Watson Assistant, Watson AI, IBM IX, Bluewolf, an IBM company, and GBS.
- Watson Advertising uses the world's leading artificial intelligence (AI) technology to unlock data and insights and help marketers make better decisions.
- Watson Assistant is an offering for building conversational interfaces into any application, device, or channel.
- IBM IX offers creative solutions for business strategy & experience design to solve complex business challenges.
- Bluewolf, an IBM Company, is the global Salesforce consulting agency committed to creating customer and employee experiences that drive a return on innovation.
Q6. Does this divestiture signal a lack of success in key acquisitions?
A6. No. It’s part of IBM’s ongoing investment prioritization. As a result of significant investment in integrated offerings since 2014, strategic imperatives have grown from 25% to 50% of IBM revenue as seen in the latest Q4 and 2018 earnings release. IBM is focused on leading in the emerging, high-value segments of the IT industry with an integrated model that prioritizes innovation and expertise. The products in scope for this divestiture have become an outlying element of this integrated model. Centerbridge has stated that it is committed to advancing the acquired products through continued investment and accelerating roadmaps and introducing new product categories.
- Moving forward, Centerbridge has stated that the Company will be led by Mark Simpson and other key IBM team members and that it looks forward to working with existing business partners and the highly talented team in the business’s next phase of growth.
Q7. Both divestitures involved the same business unit. Is there anything left of that unit?
A7. Yes, the unit's supply chain business portfolio is an ongoing business for IBM and remains a strategic element of IBM’s high-value model of integrated offerings.
For more information on IBM’s supply chain business: https://ibm.co/2SQZx2u
Q8. Is the sale of the supply chain portfolio next?
A8. While we don't speculate on what IBM may do in the future, the Supply Chain portfolio is a key element of IBM's integrated strategy, aligning closely with technologies such as Cloud, Blockchain and IoT. IBM knows supply chain is ripe for applying disruptive emerging technologies such as AI, blockchain and IoT to improve supply chain automation, visibility, operations, and performance. IBM will continue our investment to create leading edge innovation in supply chain. IBM looks forward to continued growth in supply chain. To find out more about IBM supply chain http://ibm.biz/Bd2tPT
Q9. When will the transition and transaction close?
A9. With the announcement on April 4, 2019, the transition is expected to begin immediately with a potential close date within the first half of this year, subject to the satisfaction of applicable regulatory reviews, labor relations processes, and customary closing conditions. Please note, however, that definitive dates will be communicated as they are defined and refined for impacted countries.
Q10. Is this related to the recent HCL transaction?
A10. The divestiture announced today and the recently announced divestiture to HCL both involve assets in the marketing and commerce space but are otherwise not related.
Q11. What is the vision of this new company and what does it look like?
A11. Centerbridge has stated that after closing, Centerbridge intends to form a standalone company that will deliver a modern, comprehensive portfolio of solutions to meet the CMO’s biggest challenges across marketing and advertising. Centerbridge said this new business will announce a new name and brand identity, which will be launched after close.
Centerbridge has stated that following closing, the new company will be led by Mark Simpson as CEO, along with other key IBM executives, and will move its headquarters to New York City. Centerbridge plans to establish a board of directors for the new company, composed of independent members with deep marketing and software experience.
The platform today includes marketing automation tools, marketing analytics, an AI-powered content management system, an open ecosystem connector, and robust services. Centerbridge has stated that it intends to even better position the standalone company to lead the next generation of marketing and commerce software solutions, by further investing in AI, growing the marketing ecosystem, and giving marketers tools to protect user privacy.
Q12. What changes?
A12. The change is that the above mentioned in-scope products and solutions will no longer be owned by IBM and, instead will be owned and operated by Centerbridge through its new stand-alone company.
As Centerbridge has stated that it is committed to advancing the acquired products through continued investment and accelerating roadmaps and introducing new product categories.
Centerbridge has stated that after the transaction closes, it intends to form a new standalone company that will be well position to lead the next generation of marketing and advertising software solutions. The new company will announce a new name and brand identity, which will be launched after close.
Q13. What does not change?
A13. IBM’s vision and mission to deliver cybersecurity, analytics, blockchain, supply chain, AI, hybrid cloud and specific industry platforms and solutions has not changed. In particular, supply chain remains a priority for our organization. IBM knows supply chain is ripe for applying disruptive emerging technologies such as AI, blockchain and IoT to improve supply chain automation, visibility, operations, and performance.
Over the years, IBM has made a significant investment developing the leading portfolio of AI-powered marketing SaaS products and solutions and modernizing the platform and infrastructure of the commerce SaaS products. Centerbridge stated that it is committed to advancing these products through continued investment and looks forward to accelerating their roadmaps and introducing new product categories.
For more information on IBM’s supply chain business: https://ibm.co/2SQZx2u
Q14. What communications are being sent to customers and how can Business Partners get visibility?
A14. On day of announcement, customers will receive an initial email with general information about the planned transaction, which will be followed with specifics closer to closing.
This communication will also provide a general email address for any follow up questions. You can also request a copy of customer communications by requesting through firstname.lastname@example.org.
Q15. Will product enhancements and new capabilities be delayed?
A15. Until the transaction with Centerbridge closes, IBM’s focus remains clear: to deliver uninterrupted value to customers by continuing to deliver on product enhancements and capabilities as defined in product visions and roadmaps.
Centerbridge stated that it is committed to advancing these products through continued investment and looks forward to accelerating their roadmaps and introducing new product categories.
Q16. Will anything change for clients who already have contracts that include these solutions?
A16. The announcement will be shared via an initial email with general information about the planned transaction. Further communication will be sent at close with additional details explaining the changes that will occur regarding contracts and ongoing Subscription and Support. The details in these emails will vary based on their specific contract type (standard, consent required, ELA, OEM/ASL, etc.).
Q17. What if our client has an ELA contract?
A17. Once the transaction closes, the in-scope products cannot be included in new ELAs or substitutions. For existing ELAs with committed S&S, contractual support commitments will be honored. Please contact the client deal maker with additional questions.
Q18. Will pricing change for products that have already been licensed or purchased by clients?
A18. All offerings impacted by the transaction continue to be IBM business until this transaction closes. There are no changes in how IBM sells, operates and supports its customers. Once the transaction closes, Centerbridge will assume responsibility for setting prices for its products.
Q19. What is Centerbridge Business Partner Go To Market Strategy?
A19. Moving forward, Centerbridge stated that it looks forward to working with existing business partners during this business’s next phase of growth.
Centerbridge is a private investment management firm employing a flexible approach across investment disciplines – from private equity to credit and related strategies, and real estate – in an effort to find the most attractive opportunities for their investors and business partners. Centerbridge is dedicated to partnering with world-class management teams across targeted industry sectors and geographies to help companies achieve their operating and financial objectives.
With over $27 billion in capital under management, Centerbridge was selected due to IBM’s confidence in their ability to invest in this modern and scalable marketing SaaS architecture and ecosystem and to support the success of the IBMers who have made these offerings so successful.
For more information, please visit Centerbridge Partners L.P.
Q20. Will Business Partners still be able to work with same Business Partner Representative?
A20. Yes, there aren’t any people changes at this time. Touchpoints for sales, customer and technical support, marketing and others will remain the same until close. Centerbridge will provide coverage plans for post close operations.
Q21. What happens if a Business Partner has an Embedded Solution Agreement (ESA) of the divested IBM Technology?
A21. All offerings impacted by the transaction continue to be IBM business until the transaction closes, which is expected in mid-2019. There are no changes in how IBM sells, operates and supports its customers and partners. This transaction requires regulatory review.
ESA entitlements will transition to the company formed by Centerbridge Partners at closing.
Q22: How does this announcement impact my status in IBM’s Business Partner program?
A22: There will be no change to your PartnerWorld status through 2019 year end; however, as the related Marketing and Commerce competencies are retired with the divestiture, Business Partners will no longer be eligible to earn more benefits through those competencies.
Q23. Do my incentives for 2019 change?
A23. This has no impact on Business Partner incentives until the close of the transaction. Centerbridge will notify Business Partners of their plan after close of the transaction.