BMC Buying BladeLogic

BMC Software said Monday that it intends to purchase BladeLogic, a maker of data center automation software, for US$28 per share in cash, or about $800 million.

The company characterized BladeLogic as "the fastest growing company in the fastest growing segment of IT management software" in a statement.

BladeLogic's board of directors has unanimously recommended that the company's stockholders accept BMC's offer, which will occur within the next 10 days, according to a statement.

BMC said the pending purchase will fit into its business service management (BSM) portfolio. The two companies have already worked together to integrate their products, according to BMC.

This would be the latest in a string of recent acquisitions by BMC, which include ProActiveNet, maker of an IT "early warning system," and RealOps, a company specializing in runbook automation software.

Bob Beauchamp, BMC's CEO, said during a conference call that the redundancy between the companies' portfolios is "minimal," which "stands in stark contrast to the overlap seen in acquisitions by many of our competitors."

"We will offer day-one, customer-proven product integration," he added.

Dev Ittycheria, CEO of BladeLogic, also described the company's products as complementary, and declared the pending deal will make BMC the "obvious choice for an IT executive when it comes to managing the data center."

Last week, Citigroup named BladeLogic, among other tech firms, as being ripe for acquisition. Beauchamp indicated that BMC had designs on the company for a while. "We have coveted this business for a long time," he said. "All our evaluations of this technology ... showed BladeLogic was the best product of its type, period. Convincing them to sell this was not an easy process."

Ittycheria said BladeLogic had been "very highly focused on executing [its] stand-alone strategy when approached by BMC."

The entreaty prompted BladeLogic to reach out to a "group of alternative potential buyers who had expressed interest in the past ... ultimately BMC proposed the most compelling transaction," he added.

Stephen Elliot, an analyst with IDC, said via e-mail that the pending deal makes sense for BMC, but argued that the integration work would be broad.

BladeLogic has developed a "solid product portfolio through roles-based controls, granular change and configuration visibility, and application release management," he said, but "BMC must now work hard to integrate a group of products across the client, [runbook automation], server, and application stack."

In a separate interview Monday, Elliot said BMC is set to scoop up the last big standalone prize in data center automation: "This [is] the large market shareholder in this space. There are no other options."

"The other interesting thing with BMC is they're as much about mainframes as they are about distributed [environments]," Elliot added. "Might they want to port some of the BladeLogic capability into the mainframe side of it?"

Another observer, analyst Evelyn Hubbert of Forrester Research, said by e-mail that BMC is making "a great move."

While BMC has already been playing in the data center automation space to some degree, "BladeLogic is the key partner to get a stronger position, as BladeLogic has an excellent server provisioning solution," Hubbert added. "They will have to do some 'cleaning' of the overall solution, but BMC is good at that and good at integrations."

Hubbert noted that one BMC rival, Hewlett-Packard, gained "a bit of a head start" by purchasing Opsware, another data center automation vendor, for about $1.6 billion last year.

"BMC and HP are competitors and they are certainly eager to win against each other. This puts them at par at the data center," Hubbert asserted. HP's only advantage against BMC now is its hardware products, which give it an "entry into the decision-makers buying [hardware]," she added.

HP, meanwhile, announced a set of data center optimization-related products and services of its own on Monday.

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