IBM to buy Ascential for $1.1 billion

IBM has agreed to buy data integration software maker Ascential Software for about US$1.1 billion in cash, the companies said Monday.

Ascential's products are used to build data warehouses, feed data into business intelligence systems, and consolidate enterprise applications, among other things. If approved, the acquisition will strengthen IBM's information integration offerings, the company said.

The acquisition is subject to approval from Ascential's shareholders and regulators, as well as other customary closing conditions. IBM expects to complete the purchase in the second quarter of 2005, the companies said.

After the acquisition, Ascential, will become a business unit within IBM's Information Management software division. Ascential's products will become part of IBM's software offerings and sold through IBM's and Ascential's sales channels and partners, the companies said.

Data integration is a key part of IBM's software strategy. The Ascential Enterprise Integration Suite complements IBM's WebSphere Information Integrator products, according to IBM. Ascential has more than 3,000 customers worldwide. IBM and Ascential already have more than 550 joint customers, the companies said.

The acquisition should have no effect on Ascential customers, said Chris Rubsamen, an IBM spokesman. All customer contracts will be honored and the approximately 1,000 Ascential employees will be offered jobs in similar roles at IBM, he said.

There is very little overlap in the IBM and Ascential products, said Ascential President Peter Fiore on a conference call with financial analysts. IBM's integration products allow users to access information in real time, but without actually collecting the data in one physical location. Ascential's products move data into a repository, he said.

"What the combination gives us is a broad capability to bring those technologies together and to solve the kind of problems where customers want to be able to combine and do analysis based on historical information but also to have access to real time information from transactional systems," Fiore said.

Ascential is the former Informix Business Solutions. After IBM snapped up Informix's database business for US$1 billion in April 2001, Informix Business Solutions changed its name to Ascential.

IBM's acquisition of Ascential is a classic example of consolidation, said Ian Wesley, a research director at Ovum. "IBM has clearly been building up this side of its business for some time, but they had a big hole in their product portfolio that could be filled by buying Ascential. They will now have a very strong offering."

Spending on data integration has been growing steadily, reaching US$9.3 billion in 2003, and is estimated to hit US$13.6 billion in 2008, according to a July 2004 study by market research company IDC. Key rivals to Ascential and IBM are Informatica, SAS Institute and Oracle.

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