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IBM Buys MRO to Answer HP-Mercury Bid

UPDATED: IBM  today agreed to purchase software and services provider MRO Software, Inc.  for $740 million in cash.

IBM is positioning this move as way of a broadening of its product portfolio.

But it will also allow IBM to further integrate enterprise asset management solutions with IT asset management solutions, said Al Zollar, general manager of the company's Tivoli division.

Enterprises want to "manage these assets with a single consolidated infrastructure, a single console. This move we're making with MRO helps us achieve that," Zollar said during a conference call with reporters.

MRO is one of the top makers of software and services for asset and service management, an operations strategy used by many of the world's larger corporations to improve the way they manage production gear, facilities and hardware and software.

The move should fortify IBM's already massive fleet of software, services and business consulting offerings.

But it is also a reminder to HP  that Big Blue isn't resting on its laurels in the multi-billion-dollar management software sector.

The deal comes a week after HP announced its intention to acquire governance software provider Mercury Interactive for $4.5 billion.

More specifically, buying MRO is IBM's answer to HP's purchase of Peregrine Systems, which made asset and service management software for tracking IT assets, expense controls, process automation and service control.

"We have a much broader portfolio overall than not only HP but anyone else in the industry... This positions us to address a broader set of client needs, and that's ultimately what attracts clients to your offering," Zollar noted in response to a question from internetnews.com.

Chip Drapeau, president and CEO of MRO, said the two companies' combined offering will put competitors at a huge disadvantage.

"We're putting our competitors in a little bit of a box, where they either have to say they're working on something like this, or else that it's not that great of an idea."

"Neither of those are going to be very strong competitive platforms," he said.

Zollar indicated that MRO will be folded into the Tivoli division.

He also said that IBM will try to keep MRO's team focused on its successful enterprise asset management solutions while it begins to integrate that offering with IBM IT asset management solutions.

"We'll really look to accelerate the integration between the Tivoli IT service management capabilities and the MRO capabilities," he said.

Zollar also noted integration will be easy to achieve because of the technology platform adopted by MRO.

Its platform is based on service oriented architecture and J2EE.

"Architectural synergies between the companies are fairly obvious and significant," noted Drapeau, who will remain with the company and report to Zollar.

The merger, for which IBM will pay $25.80 per share for Bedford, Mass.'s MRO, is expected to close in the fourth quarter this year.

InternetNews.com Managing Editor Clint Boulton contributed to this story.