IBM Bags Ascential for a Billion

IBM Corp. (NYSE: IBM)has stumped up $1.1 billion in cash for Ascential Software in an attempt to put the squeeze on its rivals Oracle Corp. (Nasdaq: ORCL), Microsoft Corp. (Nasdaq: MSFT), and SAP AG (NYSE/Frankfurt: SAP).

The Westborough, Mass.-based firm offers a range of software to consolidate different applications and build data warehouses. The acquisition remains subject to approval by Ascentials shareholders, but IBM hopes it will close sometime in the second quarter of this year. After that, Ascential will operate as a business unit within IBM’s information software management division, under general manager Janet Perna. IBM is looking to add Ascential’s products to its WebSphere platform of middleware products.

On a conference call this morning, analysts pressed Ascential over whether the imminent beta launch of Ascential's new software, code-named Hawk, will be affected by the deal.

“We still have this as a priority -- all our resources are invested in getting the product out as quickly as possible,” said Ascential president Peter Fiore. But he added that the timeframe for delivering the product will be dictated by the plans to integrate the two companies.

IBM's big cash outlay for Ascential testifies to the importance IBM places on the smaller firm's wares. IBM also seems intent on keeping the integration as free of FUD as possible, avoiding the turbulence that's attended the trend by major players to acquire specialist suppliers. Case in point: the upheaval surrounding Oracle's PeopleSoft acquisition (see Oracle & PeopleSoft: Still Work to Do and Oracle Announces Job Cuts). Last week, Oracle, continuing to play the role of predator in an increasingly competitive market, attempted to scuttle SAP's bid for software specialist Retek (see What's Next on Oracle's Hit List? and Oracle Makes Cash Offer for Retek).IBM is apparently looking to avoid this kind of drama. On this morning's call, Ascential CEO Peter Geynes sidestepped questions about how the deal came about, whether any other bidders were involved, and who approached whom. He said specific events surrounding the transaction will be explained in documents to be filed with the Securities and Exchange Commission (SEC).

In addition to downplaying the acquisition particulars, the companies are also looking to calm employee fears. An IBM spokesman confirmed to NDCF this morning that there are no plans for layoffs amongst Ascential’s staff of around 1,000 employees. The spokesman added that, even if certain roles do overlap, IBM will work something out. “If there is an overlap, we will find a place for them somewhere in the company,” he says.

In trading this morning, IBM’s shares rose 32 cents (0.35%) to $91.83. Ascential’s shares rose $2.61 (16.62%) to $18.31.

— James Rogers, Site Editor, Next-Gen Data Center Forum