IBM buys software firm SPSS for USD1.2bn

IBM is buying Chicago-based software analytics firm SPSS in an all-cash deal worth USD1.2bn. The move is designed to bolster IBM's existing information management software portfolio, in a bid to provide broader predictive data services to a range of business customers. The buyout was agreed at a price of USD50 per share, more than 40% higher than SPSS's Monday closing share price of USD35.09. IBM says the deal is expected to close in the second half of 2009, dependent on SPSS shareholder approval.

SPSS provides predictive analytics technologies to companies from a broad range of industries including telecoms, banking, finance, insurance, healthcare, retail, government and market research. Its technology is designed to anticipate consumer trends, to predict changes to a company's operations and to automate decisions.

IBM says it is expanding its focus on this type of technology in response to the growing need for companies to cut costs, reduce risk and increase profitability. It says SPSS's technology will allow it to offer a number of new cross-sector services, including demand forecasting, employee hiring and retention, customer profitability, credit scoring and fraud detection services.

"With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight – but true foresight," says IBM's general manager for information management, Ambuj Goyal. "Predictive analytics can help clients move beyond the 'sense and respond' mode, which can leave blind spots for strategic information in today's fast paced environment"

In a separate announcement, IBM also says it is acquiring security software company, Ounce Labs, for an undisclosed sum. Ounce makes a range of enterprise security products including scanning software and source code analysis.

The deals are the latest in a string of acquisitions by the IT giant. In May, IBM bought database specialist Exeros, while in November it acquired virtualisation specialist Transitive. However, the firm failed to close a deal to buy Sun Microsystems despite holding talks. Oracle eventually paid USD7.4bn for the firm.

Earlier this month, IBM announced better than expected Q2 results, with per-share earnings up 18%, despite a 7% fall in total sales. On the back of this, IBM predicted earnings this year of at least USD9.70 per share, compared with a previous prediction of around USD9.20 per share.