IBM pays out $745m for Telelogic

Analysts believe that IBM's purchase of Telelogic will benefit both companies' customers

IBM announced yesterday that it will acquire Telelogic AB, a Swedish provider of software development technology.

Telelogic's offerings are designed to help organisations define, model, build, test, deliver and govern the development of software used in complex systems such as aircraft radar.

Big Blue will pay approximately 5.2 billion Swedish kronor ($745m) for the firm, which has around 8,000 customers worldwide, primarily in the aerospace, defence, telecoms and automotive industries.

Industry experts believe that the deal could benefit the customers of both companies. "For Telelogic and IBM customers it should ultimately be viewed as offering great potential," said Bola Rotibi, principal analyst at Ovum.

"IBM has been missing a few key capabilities in its application lifecycle portfolio which the purchase of Telelogic plugs up quite nicely.

"The market for software vendors is shaping to be a pitched battle between IBM, HP, Oracle and Microsoft. IBM has scored a good goal against the others, and it will be interesting to see how they react. Things have just got a lot more interesting."

Headquartered in Malmö, Sweden, with US headquarters in Irvine, California, Telelogic has more than 1,100 employees and operations in 22 countries.

The company reported revenues of approximately $208m in 2006, including approximately $89m in licence revenue.

"From today's next-generation entertainment devices to tomorrow's space-information systems, software is the lifeblood of complex systems," said Dr Danny Sabbah, general manager of IBM Rational Software.

"IBM's acquisition of Telelogic will complement our entire portfolio to help our clients drive efficient and effective software development processes that are vital to product delivery."

IBM will acquire the outstanding shares of Telelogic AB after receiving acceptance from more than 90 per cent of the stock ownership in Telelogic and receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions.

On acquisition close, Telelogic will become part of IBM's Rational Software division.