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IBM to Buy Data Integrator Ascential for $1.1B

UPDATED: IBM agreed to acquire Ascential Software for $1.1 billion in cash in a bid to extend its lofty position in the market for data integration software.

The deal, priced at $18.50 per share, is expected to close in the second quarter, according to IBM officials.

Businesses all over the world use data integration software to piece together disparate applications, or craft business intelligence systems and data warehouses. Enterprises can streamline operations with the software Ascential sells, which helped make the Westborough, Mass., company attractive to IBM, whose goal is to provide software on demand.

Big Blue will fit Ascential technology into its WebSphere Information Integrator line, helping customers pull data from sources such as content management repositories and relational databases, said Janet Perna, who, as general manager of IBM's information integration division, will lead Ascential's team of 1,000 employees.

"Over 40 percent of IT budgets today are spent in integrating information and applications," Perna said on a conference call. "Our whole information integration initiative is around helping companies reduce the cost and accelerate the time it takes to integrate information."

In examples of how WebSphere and Ascential's products could work together, Perna said customers can use Information Integrator's federation capability with Ascential software to deliver enterprise views of financial systems or other corporate assets.

For business performance management, users can leverage Ascential software to maintain a data warehouse for strategic analysis, while using Information Integrator to correlate real-time events with information in the data warehouse.

The deal makes sense based on the companies' strategic partnership for four years, engaging in joint engineering, marketing, sales and customer support. Ascential software already integrates with IBM's WebSphere Business Integration software as part of a service-oriented architecture (SOA) for distributed data management. The companies also share 550 joint customers around the world.

IBM and Ascential expect very little technology overlap and will retain all Ascential employees at the Westborough office and in other locations, Perna said.

"I'm not concerned at all with the integration of the organizations," Perna said, noting the strong cultural fit and the fact that IBM has made eight information integration buys since 2001.

Ascential has also made some key technology buys in the past few years, including Mercator for data transformation and Torrent for data warehouse software.

That technology and the fact that Ascential has bridged the gap between data integration and SOAs, something IBM has been working toward, makes the deal a logical one, said Hurwitz Associates analyst Judith Hurwitz.

At $1.1 billion, the analyst said IBM got a good deal for a company whose revenue swelled in 2004, growing 46 percent to nearly $272 million, and that has $500 million in the bank. Perna said IBM accrued triple-digit growth for its information management software in 2004 and aims to improve that in 2005.

Such success stories dovetail with market research from IDC, which estimates that worldwide data integration spending will increase from $9.3 billion in 2003 to $13.6 billion in 2008.