Ascential to buy Mercator

NEW YORK: Ascential Software Corp. has decided to buy rival Mercator Software Inc. for $106 million to expand the market for software, allowing different computer systems to communicate.

Ascential said it would begin a cash tender offer for Mercator's shares, offering $3 per share, a 22 percent premium over Mercator's latest share price. It expected the offer to close by the end of the third quarter.

The deal signals more consolidation in the hard-hit software sector, amid PeopleSoft Inc.'s acquisition of rival J.D. Edwards & Co. and Oracle Corp.'s hostile bid for PeopleSoft. Earlier in July, data storage company EMC Corp. also said it would buy storage software company Legato Systems Inc. for 1.2 billion pounds.

Ascential and Mercator compete against IBM and others in the market for so-called data integration software, which enables companies to stitch together their disparate computer systems to do business more efficiently.

But like the majority of the software sector, data integration companies have suffered as businesses have cut back on technology spending.

Ascential said it expects the deal to add to its earnings within the first year of the combination.

Shares of Mercator closed at $2.45 on Nasdaq on Friday. Ascential closed at $16, also on Nasdaq.