International Business Machines Corp. (IBM) said the acquisition would complement its information integration business, a unit that produced triple-digit growth in 2004, and vault it into the No. 1 position in this software niche.
The Ascential deal is expected to put pressure on IBM rivals such as Oracle, the No. 1 provider of database software, and SAP AG, the leading maker of software used by companies to stitch together business operations like payroll, manufacturing and human resources systems.
"It probably has the most impact for Oracle," said Judith Hurwitz, an analyst with Hurwitz Associates. "You will see Oracle do more acquisitions in this area to ensure they don't lose share."
Ascential, based in Westboro, Mass., provides software that helps companies pull together data from different computer systems and analyze them. Retailers are snapping up its software so they can quickly analyze trends seen from different store systems.
The IBM deal values Ascential at $18.50 a share, an 18 percent premium to its closing stock price on Friday.
Armonk, New York-based IBM has been on a buying spree of information management software in recent years, making eight small or medium-sized deals since 2001 in content management, information integration and business intelligence.
Ascential is the 40th acquisition in the past 10 years by the IBM software group. IBM is selling its personal computer business to China's Lenovo Group Ltd. (search) but still sells the computers, software and techical services used by big organizations to run their operations.
Shares of Informatica Corp., an Ascential rival, rose 3 percent to $7.54, boosted by optimism about a potential takeover offer.
Hurwitz does not expect Oracle to initiate a bidding war for Ascential, as it did with Retek, which has agreed to be bought by SAP.
Ascential, an IBM partner, was born out of the remaining assets of Informix Inc., which was acquired by IBM in 2001.
According to research firm IDC, data integration spending is expected to increase to $13.6 billion in 2008 from $9.3 billion in 2003.
"Vendors are bulking up as quickly as they can and pay good money to get there first," said Dana Gardner, an analyst with Yankee Group.
Ascential grew rapidly in 2004, with revenue rising 46 percent to $271.9 million.
The acquisition, which is expected to close in the second quarter, is subject to approval by Ascential shareholders and regulatory authorities.
Once the deal is completed, Ascential's operations will be established as a business unit within IBM's information management software division.
IBM said it will offer Ascential employees jobs within the company, and is evaluating what roles within the unit Ascential's executives and management will play.
Ascential shares were up 16.6 percent to $18.31 in Nasdaq trade. IBM shares were up 35 cents to $91.86 on the New York Stock Exchange (search).