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5/24/2010
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IBM To Pay $1.4 Billion For Sterling Commerce

Big Blue plans to add AT&T's systems integration unit to its WebSphere middleware group.

IBM said Monday that it has agreed to acquire AT&T's Sterling Commerce unit for $1.4 billion in cash.

Sterling Commerce offers a range of software and services designed to help companies connect internal and external business systems—an area of increasing emphasis for IBM.

"Businesses today are operating in a highly competitive global environment in which lines between actions taking place within and outside an organization's four walls are blurring," said IBM WebSphere general manager Craig Hayman, in a statement.

The move should bolster IBM's already strong integration capabilities, and help it fend off competition from Oracle and Hewlett-Packard—both of which are also bulking up their enterprise software portfolios through buy outs.

"This acquisition will give IBM new tools to help clients build dynamic business networks that connect partners, suppliers, and clients and deliver a consistent customer experience across channels. In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers," said Hayman.

IBM said it plans to "continue to support" existing Sterling customers and "enhance" the company's technologies. About 2,500 Sterling employees will be added to IBM's WebSphere unit. Sterling counts about 18,000 customers worldwide.

"The broad global reach and additional capabilities IBM offers make this acquisition great news for our customers and partners," said Sterling CEO Bob Irwin, in a statement.

"The combination of IBM's products, services, and skills with the Sterling Commerce B2B integration and cross-channel capabilities resulting from this acquisition is unparalleled," said Irwin.

It was not disclosed if Irwin would remain with the unit after the deal is closed.

IBM said it expects the transaction, which is subject to regulatory approval, will be completed within the second half. AT&T will record a one-time pretax gain of about $750 million in the quarter in which the transaction closes.

IBM shares were off .46% in premarket trading Monday.

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