IBM announced today, December 6 that it has entered into a definitive agreement to acquire the equity of Rational Software Corp for approximately $2.1 billion, or $10.50 per share.
Rational provides open, industry standard tools, best practices and services for developing business applications and building software products and systems, including embedded software for devices such as cell phones and medical systems.
Industry analysts have reported that companies using Rational software have seen return on investment rates of 200 percent and higher as a result of increased productivity and application quality and reduced development cycles and testing times. IBM has been using Rational software since 1985.
IBM will now be able to provide a complete software development environment for companies that want to integrate their business processes and software infrastructure across their companies with suppliers, customers and employees. This requires the integration of data management, systems management, collaboration, transaction and business process integration middleware and software development.
IBM intends to merge Rational’s business operations and employees into the IBM Software Group as a new division and fifth brand, joining WebSphere, Lotus, Tivoli and DB2. When the acquisition closes, Mike Devlin, CEO and co-founder, Rational Software, will become the general manager of the new division and will report to Steve Mills, IBM senior vice president and group executive, Software Group.
The acquisition is subject to customary closing conditions, including Rational stockholder and government regulatory approvals. IBM and Rational anticipate closing in the first quarter of 2003.