IBM Bolsters Services Automation With $1.3 Billion Buyout Of Internet Security Systems - InformationWeek

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Software // Enterprise Applications

IBM Bolsters Services Automation With $1.3 Billion Buyout Of Internet Security Systems

The operations of ISS, which is IBM's fifth largest acquisition ever, will be folded into its Global Technology Services outsourcing arm to expand offerings in the fast-growing security services market.

IBM continued its recent acquisition spree Wednesday, announcing the buyout of Internet Security Systems, an Atlanta-based software and consulting firm that helps businesses protect their data and computer systems from hacking and other cyber-threats. IBM will pay $1.3 billion, or $28 a share, for ISS.

IBM says the purchase will help bolster its offerings in the fast growing security technology and services market. The company plans to integrate ISS' operations into its $32 billion Global Technology Services outsourcing unit. ISS' offerings include its Proventia network protection software and RealSecure server security system. IBM says the products are complementary to its line of Tivoli security and infrastructure management software.

The buyout is IBM's fourth major acquisition deal this month. On Aug. 1, the company bought privately held Webify, a developer of so-called services-oriented architecture software, which helps companies link together their business applications. On Aug. 10, IBM announced a $1.6 billion offer to purchase content management software vendor FileNet. Additionally, IBM on Tuesday completed the $740 million acquisition of enterprise asset management specialist MRO Software, a deal originally disclosed on Aug. 3.

IBM says it expects the ISS transaction to close in the fourth quarter of 2006. It would be the fifth largest acquisition in the company's history.

Most of IBM's acquisitions in recent months have been of companies that produce software that automates what has traditionally been labor-intensive infrastructure management tasks. By deploying such technology on behalf of its customers, IBM can continue to handle the computing needs of large companies while keeping its own labor costs to a minimum. The company is also reducing services costs by moving much of its workforce to India, where tech workers are paid considerably less than their American counterparts.

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