Why IBM and Other Tech Companies Have Their Sights on the UK
How Optevia Acquisition Will Boost IBM’s Strategic Imperatives
Optevia is IBM’s sixth acquisition in the UK market
Earlier in the series, we discussed how the acquisition of Optevia will strengthen IBM’s (IBM) presence as a SaaS (software-as-a-service) consultant in UK’s (EWU) public sector market. With the Optevia acquisition, IBM continues to follow its acquisition strategy in 2016 to boost its revenue growth. IBM has announced eight acquisitions in 2016 alone. However, despite IBM’s numerous acquisitions, Optevia is only the sixth acquisition the company has made in the UK to date.
The UK consulting space is attracting a lot of attention from tech players
Recently, the UK (EWU) has seen a lot of M&A (mergers and acquisitions) activity. On March 21, 2016, IHS (IHS), a data intelligence and analytics firm, announced the acquisition of Markit (MRKT.O) to form a $13 billion company in the UK. The primary reason behind this move was the benefit of the lower corporate tax structure in the UK. Many US-based companies have exercised this option to lower their taxes.
IHS and Markit together will form a new company, IHS Markit, which is expected to have a corporate tax rate in the low-to-mid 20% range. This is far lower than the 35% tax rate that US firms are required to pay. The above chart by KPMG shows the difference in corporate tax rates between 2009 and 2015 in the US and the UK. Low corporate tax rates add to the business popularity in the UK.
In February 2016, BlackBerry (BBRY) announced the acquisition of Encription, a UK-based firm that provides government-focused consultancy, especially security offerings. In 2015, Accenture (ACN) acquired two Salesforce (CRM) partners, Tquila and Cloud Sherpas. Both the acquisitions enabled Accenture’s Salesforce consultants to more than double in the UK.
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