Computer Associates (CA) today announced an agreement to buy Sterling Software in a $4 billion stock-for-stock acquisition.
Maintaining that the deal was the largest in the software industry, CA said the acquisition would expand its products and services in three key areas focused on enhancing its internet ebuiness strategy - storage area and network management, integration of enterprise applications and business intelligence portal software.
However the deal is subject to antitrust clearance. Sanjay Kumar, president and chief operating officer, said: "We want it to be a speedy transaction," although he admitted it is subject to the Department of Justice, and European Commission's antitrust laws as well as SEC approval.
Sterling Williams, chief executive of Sterling Software, stressed that the merger will be beneficial for clients and employees: "If you are on same battle field, you look at rivals as bad and good guys. CA is not directly competitive. Its products are complementary. CA is the good guys."
He added: "One plus one make a lot more than two - especially culturally. We wouldn't be doping it if it weren't a good idea. It is an outstanding opportunity for employees, customers and shareholders and a bad deal for competitors."
However, Claus Egge, analyst at IDC, warned: "This is classic CA behavior - snapping up players one after the other."
He added: "Sterling customers will be nervous about it because of the uncertainty. Some may have chosen Sterling because of its culture as an independent player."
Kumar said Sterling is leader in OS/390 network systems and that the combined companies will have the only end-to-end management in storage area network area. "Network and storage management will become unified in the very near future," he added.
Egge agreed that the technology fit between the companies is good in the storage space: "The Sterling storage products fit into where CA is not strong. Sterling has been better at concentrating on that."
The companies plan to combine the capabilities of Sterling's Cool suite, a bundle of software development tools, with CA's Jasmine database software, allowing users to connect older computer systems to newer, Internet-based applications.
Kumar said Cool Jasmine and Cool Nugent can "be expected in the future." CA also plans to combine Sterling's products with its information visualisation and Neugents neural network technology, which CA developed last year.
'Sunlit wet sidewalk' provides evidence of methane rainfall on the north pole of Saturn's moon Titan
Methane rainfall indicates the start of the summer season in Titan's northern hemisphere
Scientists believe there could be other hydrides or superhydrides with super conducting properties
Resetting the telemetry circuits and associated boards brought the instrument back to operations mode
Fortnite news and updates: Flaw in Fortnite authentication could have helped attackers steal player login credentials
Attackers could have used Fortnite security flaw to buy in-game currency on players' stored credit cards