IBM to acquire Telelogic

IBM to pay US$745 million for Telelogic

IBM Monday announced a cash tender offer of about US$745 million to acquire all outstanding shares of Swedish application life-cycle management software maker Telelogic.

IBM executives say the deal, which represents about 5.2 billion Kronor for the Swedish Telelogic, based in Malmo, will augment IBM's Rational Software division with software that helps organizations define, model, build, test, deliver and govern software development processes for complex systems such as aircraft radar or automotive antilock brake systems. The addition of its technology, Big Blue officials say, will help IBM customers more efficiently develop sophisticated applications and govern the environments.

"IBM's acquisition of Telelogic will complement our entire portfolio to help our clients drive efficient and effective software development processes that are vital to product delivery," said Danny Sabbah, general manager of IBM Rational Software, in an IBM press release.

Telelogic, which has U.S. headquarters in Irvine, Calif., has more than 1,100 employees, operations in 22 countries, and boasts more than 8,000 customers, primarily in the aerospace and defense, telecommunications and automotive industries. The company reported US$208 million in 2006, US$89 million of which represented license revenue.

"The acquisition will provide our clients with enhanced capabilities to develop and deploy complex systems on a global basis," said Anders Lidbeck, president and CEO of Telelogic, in a company press release. "IBM and Telelogic clients will be able to leverage a broader set of capabilities without the need to replace existing systems."

The acquisition news comes one week after IBM announced it would acquire Watchfire and add its Web application security tool AppScan to the IBM Rational Software line as a security, compliance and quality-testing tool. The Telelogic buy also coincides with Big Blue's IBM Rational Software Development Conference 2007 being held this week in Orlando. In 2002, IBM put down US$2.1 billion for what is now its Rational Software division in an effort to add application development and life-cycle management capabilities to its software portfolio, which already included middleware and integration technologies by way of WebSphere and management products from Tivoli Software.

Details of the acquisition involve "IBM acquiring the outstanding shares of Telelogic AB after IBM obtains acceptance from more than 90 percent of the stock ownership in Telelogic, after receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, in each case on terms which in IBM's opinion are acceptable, and after the offer has been declared unconditional," according to an IBM press release. Upon completion of the deal, Telelogic will become part of the Rational Software division at IBM.

IBM's Sabbah will host a teleconference at Noon ET Monday to address media questions and share more details of the pending acquisition.

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