AP News, June 11th, 2007
International Business Machines Corp. said Monday it agreed to buy software provider Telelogic AB for $745 million in cash, bolstering IBM's portfolio for the defense, telecommunications and automotive industries.
IBM said Telelogic will fit into its Rational software division, which also was boosted with IBM's purchase last week of Watchfire Corp., a maker of security software. Overall, IBM plans to maintain an aggressive acquisition strategy as part of a drive to have software contribute half of the company's profit by 2010.
Telelogic is IBM's 43rd software acquisition since 2001.
Telelogic products help companies develop and test software used in complex systems such as aircraft radar or antilock braking systems. Telelogic's chief executive, Anders Lidbeck, said the deal will give its customers access to a "powerful" set of products and services. Telelogic's revenue grew 20 percent to about $200 million last year.
Telelogic shares rose 0.9 percent to 21.70 kronor ($3.10) in Stockholm. IBM shares rose 15 cents to $103.22.
Ovum analyst Bola Rotibi said the deal offered "great potential" for both companies.
"IBM has been missing a few key capabilities in its ... software development portfolio which the purchase of Telelogic plugs up quite nicely."
Telelogic, based in Malmo, Sweden, has U.S. headquarters in Irvine, Calif., and has more than 900 staff in 20 countries.
IBM's offer is worth $3.10 a share and represents a premium of around 21 percent over Telelogic's closing price on May 31, the last day before market speculation mounted about a takeover offer. Telelogic said its board had unanimously accepted the offer.
The deal requires approval from relevant authorities.
