IBM Buys BRM Maker for $340M

IBM (NYSE: IBM) has agreed to buy French software maker Ilog (NASDAQ: ILOG) for 215 million euros ($340 million), the two companies said on Monday.

The deal, which was approved by Ilog’s board, is part of IBM’s strategy to make bolt-on acquisitions of intellectual companies to which it can give scale. ILOG is a maker of business rules management (BRM) software. IBM is expected to expand its middleware offerings with the acquisition.

“This combination will allow us to dramatically extend our market reach and realize the full potential of all of our technologies while protecting investments of Ilog’s customers now and into the future,” Ilog Chairman and Chief Executive Pierre Haren said in a statement.

IBM, one of Ilog’s top trading partners, is offering 10 euros per ordinary share and the U.S. dollar equivalent per American Depositary Share (ADS).

The offer price represents a premium of about 56 percent compared with Ilog’s one-month average closing share price prior to July 28, and a 37 percent premium to the closing price on Friday, July 25.

Separately, Ilog on Monday said its net profit dropped to $500,000 on revenues of $181 million in the year to June 30, from a net income of $4.9 million on revenues of $161.5 million.

“In the fourth quarter, we faced a challenging economic environment, notably in the financial sector, which remains a key source of revenues for Ilog,” the company said.

Ilog, founded in 1987 with headquarters in France and California, said it had started reducing its headcount on a voluntary basis, finishing the year with 847 people, at the same level as in the same month last year.

IBM said it had received commitments from shareholders representing about 10 percent of Ilog’s share capital.

The U.S. company has spent about $21 billion on 70 acquisitions since 2003, including Canada’s Cognos, its biggest purchase ever, for about $5 billion, in January.

IBM’s offer for Ilog is to be filed with the French market watchdog AMF after September 15, it said.

Trading in Ilog’s shares was suspended on Monday.

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