IBM to acquire software maker SPSS for $1.2B
ARMONK, New York -- IBM is bulking up its most profitable division with a $1.2 billion acquisition of business software provider SPSS, a deal that also reflects the power of wealthy technology companies to throw their money around despite the recession.
The all-cash deal announced Tuesday represents a 42% premium over Chicago-based SPSS's closing price of $35.09 on Monday.
SPSS's software helps tell companies "what's coming around the corner" and is "a really terrific acquisition" for IBM, said Charles King, analyst with the Pund-IT Inc. research firm.
"This is really a Cadillac-style technology ... it's well established and well regarded," King said.
SPSS's technology is used to comb through stockpiles of data to predict things such as how a customer will respond to a particular sales pitch, or where hot spots for crime are and where police should be deployed. The company claims its customers include agencies in all U.S. state governments, top U.S. universities and consumer goods, pharmaceutical and market-research companies.
"With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight — but true foresight," Ambuj Goyal, general manager of IBM's Information Management group, said in a statement.
The deal is expected to close later this year, and is subject to shareholder and regulatory approval. SPSS has more than 1,200 employees in 60 countries. The company had $303 million in sales last year and $36 million in profit.
The acquisition fits with IBM's strategy of strengthening its software and services divisions as a critical part of a makeover over the past decade.
IBM has spent more than $20 billion since 2003 on more than 80 acquisitions. Fifty of those acquisitions have been software companies.
One result of the transformation is that IBM, a company known for its mainframes and other computers that have powered back offices for decades, is less reliant now on hardware. Having sold off its personal computer and printing businesses, IBM makes most of its money off services and software.
