The growing demand for data integration tools has caught the attention of Big Blue.
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IBM today announced an agreement to acquire Westboro, Mass.-based Ascential Software Corp. in a cash transaction for approximately $1.1 billion, or $18.50 per share. The buyout is about 18% above the $15.70 Ascential's stock price closed at on Friday.
The deal is subject to regulatory and shareholder approval and is expected to close in the second quarter of this year.
Ascential provides data integration software that helps build enterprise data warehouses, power business intelligence systems, consolidate enterprise business applications and manage repositories of business information.
"Our initiative is based on reducing the cost and accelerating the process of integration," said Janet Perna, general manager of data management solutions for IBM. "With Ascential we are able to further extend the value of the platform that IBM is delivering."
Data integration represents a significant growth market, according to several research firms. Customer data integration is expected to take off with a typical Global 2000 company expected to spend more than $1.2 million on CDI in the next year, according to the CDI Institute in San Francisco. Framingham, Mass.-based research firm International Data Corp. projects that worldwide data integration spending will rise from $9.3 billion in 2003 to $13.6 billion in 2008.
"The data integration market has increased its visibility," said Peter Fiore, president of Ascential. "It's attracted a lot of attention from every large enterprise software vendor out there, including Oracle, SAP and Microsoft. We view this as an offensive move to combine our people, talent and capabilities to capitalize on the momentum we have built in the marketplace."
Today's announcement will likely speed up consolidation in the data integration market, said Judith Hurwitz, president of Waltham, Mass.-based Hurwitz & Associates. A potential match could include Oracle and Informatica Corp., she said. Smaller data integration firms are less attractive these days.
"Data integration is part of a bigger play," Hurwitz said. "One of the things we've been hearing is customers are uncomfortable from a service and support standpoint because it costs a lot to manage so many vendors. Customers would like to have fewer vendors to deal with."
Ascential will be folded into IBM's information integration business. It will complement the company's WebSphere Information Integrator product portfolio, which enables customers to centrally manage and access data stored across a variety of structured and unstructured sources, according to IBM. Ascential technology will be marketed and sold through the two company's sales channels and business partners.
Ascential has 3,000 customers, more than 550 of whom are already using IBM's integration products.