UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: January 3, 2019
(Date of earliest event reported)
INTERNATIONAL BUSINESS MACHINES
CORPORATION
(Exact name of registrant as specified in its charter)
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New York |
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1-2360 |
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13-0871985 |
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(State of Incorporation) |
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(Commission File Number) |
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(IRS employer Identification No.) |
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ARMONK, NEW YORK |
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10504 |
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(Address of principal executive offices) |
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(Zip Code) |
914-499-1900
(Registrant’s telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 8.01 Other Events.
On January 3, 2019, IBM and Mr. Cooper Group announced a definitive agreement under which Mr. Cooper Group will acquire IBM’s mortgage servicing business. Exhibit 99.1 contains information about this transaction that has been posted on IBM’s Investor Relations website (www.ibm.com/investor/).
IBM’s web site (www.ibm.com) contains a significant amount of information about IBM, including financial and other information for investors (www.ibm.com/investor/). IBM encourages investors to visit its various web sites from time to time, as information is updated and new information is posted.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is being filed as part of this report:
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Exhibit
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Description |
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99.1 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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Date: January 3, 2019 |
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By: |
/s/ Christina M. Montgomery |
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Name: Christina M. Montgomery |
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Title: Vice President, Assistant General Counsel and Secretary |
IBM to Divest Mortgage Servicing Business to Mr. Cooper Group
3 January 2019
On January 3, 2019, Mr. Cooper Group announced that it has entered into a definitive agreement with IBM to acquire IBM’s mortgage servicing business. A copy of the announcement press release is available on Mr. Cooper’s website.
Strategic Rationale
IBM acquired the Seterus mor tgage servicing business in the wake of the 2008 financial crisis to help a client manage a broad mortgage portfolio, including high risk loans. IBM was successful in the mortgage servicing work, and the portfolio is now much more stable. The time is now right to divest this business to a mortgage servicing specialist, whose domain-specific expertise and scale can further advance this business.
IBM runs the world’s most critical business processes, bringing together innovative technologies and industry expertise through an integrated model, to help clients transform their businesses. Over the last few years, IBM has been increasing investments and skills in key areas such as AI and analytics, hybrid cloud, security and blockchain to facilitate client transformations.
At the same time, the company constantly prioritizes investments, considering factors such as market attractiveness, differentiation, and importance to IBM’s integrated model. This ensures the company is addressing evolving client needs, while driving shareholder value.
The mortgage servicing business is not core to IBM’s portfolio, and Seterus, an IBM subsidiary, has been run as a stand-alone business. This definitive agreement signed between IBM and Mr. Cooper is another example of IBM’s commitment to disciplined portfolio management.
Transaction Details and Financial Implications
IBM will sell its Seterus home mortgage servicing platform business to Mr. Cooper Group. Mr. Cooper Group provides quality servicing, origination and transaction-
based services related principally to single-family residences throughout the United States.
The transaction is expected to close in the first quarter of 2019, subject to completion of applicable regulatory approvals and customary closing conditions. Financial terms of the transaction have not been released.
The divested content has been reported in Global Process Services, within IBM’s Global Business Services segment. In 2018, Seterus generated over $200 million of revenue, with gross margin below the Global Business Services level. Because the revenue has been declining, this transaction modestly improves Global Business Services revenue trajectory and margin profile, normalizing for the divested content.
After closing, IBM’s 2019 results will reflect the loss of revenue and profit from the divested business. This impact will be included in the expectations for 2019 provided during IBM’s fourth quarter earnings call later this month.