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4/1/2004
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IBM To Acquire Candle

The acquisition of the maker of software for managing mainframes and networked computers is expected to be completed in the second quarter.

IBM said Thursday it will acquire Candle Corp., a privately held maker of software to manage mainframes and other computers in business networks.

IBM didn't disclose terms of the deal, expected to close in the second quarter, but said Candle chairman and CEO Aubrey Chernick will leave the company. Chernick, who founded Candle in 1976, owns all of its shares, says Andy Mullins, Candle's president and chief operating officer. Candle has more than 3,000 customers, including such blue-chip companies as Coca-Cola, Fleet Bank, Ford, and McDonald's, but has been seen as slow to diversify its products beyond mainframes.

"They were conservatively managed by Aubrey," says Rich Ptak of consulting company Ptak, Noel & Associates, who's worked with both Candle and IBM. "Anybody who was under the impression that the mainframe market was anything but cutthroat competition was daydreaming. There is a vicious battle going on for market share." Computer Associates has consolidated its share of the mainframe software market through a string of acquisitions.

IBM general manager Robert LeBlanc says Candle's software can manage mainframe computers as well as those that run Windows, Unix, and Linux--an advantage for customers building applications with pieces that sit on multiple computing platforms and need to be changed quickly. Candle also sells software that can manage IBM's MQSeries and WebSphere middleware and was often a subcontractor on IBM bids, Mullins says.

Candle's 800 employees--with the exception of Chernick--will initially join IBM, Mullins says. Over the next year, he says, IBM will make decisions about the combined companies' structure.

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