24th
May
2010

IBM Buys Sterling Commerce, Engages in Aggressive Takeover Strategy

Posted by Admin

International Business Machines, or IMB as it is known colloquially, has announced the purchase of Sterling Commerce. IBM, a computer services provider, will pay out $1.4 billion in cash for Sterling Commerce, from which it will gain e-commerce software.

IBM will buy Dublin, Ohio-based Sterling from AT&T Inc., the biggest U.S. phone carrier, according to a statement from the companies today. Its software helps businesses share information and transfer files to other companies.

IBM Chief Executive Officer Sam Palmisano plans to spend $20 billion on takeovers in the next five years as he bolsters the software business, IBM’s most profitable. Sterling’s programs allow companies to manage and create their networks on external servers, a business known as cloud computing — which IBM expects to reach $3 billion by 2015.

“Plugging this gap was crucial for IBM,” said Ken Vollmer, an analyst at Forrester Research Inc. in Syracuse, New York. “IBM will be able to take the technology and meld it together with theirs.”

The transaction will likely close in the second half of 2010, the companies said. AT&T probably will record a pretax gain of $750 million on the deal once it’s completed. About 2,500 Sterling employees will join IBM’s software division.

IBM has engaged in a rapid and aggressive takeover strategy ever since CEO Palmisano came on board. It appears to be working for them, $20 billion and 100 purchases later.