IBM to buy CrossWorlds Software for $129 m

By : |October 31, 2001 0



NEW YORK: International Business Machines Corp. said on Tuesday it will buy
CrossWorlds Software Inc. for $129 million in cash to strengthen its e-business
infrastructure product line.

CrossWorlds software allows companies to automate business processes that
integrate multiple applications, such as those for managing customer
relationships and supply chains.

The deal values Burlingame, California-based CrossWorlds, which has been an
IBM partner over the last four years, at $4.65 a share, a 31 percent premium
over the stock’s Monday closing price of $3.54 on Nasdaq. CrossWorlds shares
closed up $1.01, or 29 percent, to $4.55 Tuesday and were among the top 10
percent gainers on the Nasdaq.

Shares of IBM were virtually unchanged, closing up 3 cents, or less than 1
percent, to $108.65 on the New York Stock Exchange.

The acquisition will allow IBM to tightly incorporate CrossWorlds’ technology
into its own underlying integration products, such as its MQSeries that carry
information throughout an enterprise.

"This is plumbing in the truest sense of plumbing," Steve Mills,
senior vice president and group executive, told Reuters. "We’re finding the
need for deeper integration with CrossWorlds was driving us closer and closer
together as businesses.

Its products are specified for particular industries such as finance and
telecommunications as well as tailored to particular manufacturing sectors.

IBM said that according to an International Data Corp. study, business
process integration software, such as the CrossWorlds products, represent the
fastest growing sub-segment of electronic business infrastructure software with
annual growth of 25 percent. IDC estimates the sub-segment will valued at $4
billion by 2005.

IBM and CrossWorlds said they expect the acquisition to close in the 2002
first quarter, subject to approval by regulators and CrossWorlds shareholders.

IBM said that once the acquisition is completed, it would fold CrossWorlds’
business operations and personnel into its division responsible for business
integration.

In addition, CrossWorlds’ products would come under the wing of IBM Global
Services, the software maker’s huge services arm.

After the close of the market Tuesday CrossWorlds reported a third quarter
profit excluding charges one quarter ahead of expectations. Including charges
the company said its net loss narrowed to $1.5 million, or 6 cents a share,
compared with a loss of $7.9 million, or 30 cents a share it reported last year.

(C) Reuters Limited.

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