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By Chris Kanaracus
www.itworld.com
May 24, 2010, 12:56 PM
IDG News Service —
IBM is buying AT&T subsidiary Sterling Commerce, maker of business-to-business data
integration software, for about US $1.4 billion in cash, the companies announced
Monday.
The pending acquisition will bolster IBM's already burgeoning portfolio of data
management software. Sterling Commerce's capabilities, combined with IBM's own
middleware and analytics products, will help companies respond more nimbly to sudden
business challenges," IBM said.
Sterling Commerce's platform helps companies exchange documents and other
information, as well as tie together business processes. The company competes with
the likes of GXS, Inovis and Axway.
IBM is buying market share as well as technology. Sterling Commerce counts about
18,000 customers in the financial services, retail, manufacturing and other
industries, according to a statement.
The deal is expected to close in the second half of this year.
Roughly 2,500 Sterling Commerce employees will join IBM's WebSphere division after
the deal's close, according to a statement.
The acquisition is IBM's 57th since 2003, and follows its recent move to purchase
application integration vendor Cast Iron Systems.
The Sterling deal was "not a very well-kept secret" in industry circles, with rumors
floating around for quite some time, according to Forrester Research analyst Ken
Vollmer.
Sterling Commerce is "a solid number two" after GXS in the B2B service provider
space, Vollmer said. There could be additional acquisition activity in the market
during the next couple of months, he added.
IBM chose Sterling based on business results and customer satisfaction levels
relative to rivals in the market, said Craig Hayman , general manager of WebSphere,
during a conference call Monday. "The difference was not trivial."
Sterling is itself the product of some consolidation, having purchased supply chain
application vendor Yantra in 2005 and Nistevo, maker of transportation management
software, in 2006.
With the pending deal, IBM is making a fresh run at the B2B service space, having
sold off related businesses to GXS in 2004.
Big Blue's move to buy Sterling Commerce reflects the fact that vendors need
dedicated B2B capabilities when trying to serve large customers, Vollmer said.
The companies bring respective strengths to the table, Altimeter Group analyst Ray
Wang said in a blog post.
"[Sterling] built a reputation connecting businesses with their trading community of
suppliers, customers, banks and transportation providers. IBM built a strong
platform for inter-enterprise integration and SOA governance," he wrote. "Should the
acquisition succeed, customers will gain integration across business networks and
improve decision making through richer integration."
IBM intends to bring together Sterling's technology with its own "in a way that
supports what the Sterling customer set and the IBM customer set wants to do,"
Hayman said.
http://www.itworld.com/business/108787/ibm-buys-sterling-commerce-atampt-14b
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