IBM to acquire Micromuse for $865 million
By Tim McElligott
Dec 21, 2005 11:22 AM
IBM said today it will acquire leading enterprise and telecom network management company Micromuse in an all-cash transaction valued at approximately $865 million, or $10 per share.
Expected to close in the first quarter next year, the combination of Micromuse's NetCool software and IBM's Tivoli IT service management technology will form a comprehensive solution for managing IT environments' delivery of voice, data and video. IBM's Tivoli software portfolio has produced double-digit revenue growth for the first three quarters of 2005.
“Consistent with IBM’s acquisition strategy, IBM and Micromuse have much in common,” said Al Zollar, general manager of IBM’s Tivoli Software Division. “We are building upon the existing relationship, which began in 1999 when Micromuse became an IBM business partner.”
San Francisco, Calif.-based Micromuse is a publicly held company with approximately 650 employees. Its fourth quarter 2005 net revenues were $44.7 million, an increase of 23% during the fourth quarter of 2004. For the year, Micromuse's net revenues were $160.8 million, up 10% over 2004.
Driven by convergence and consolidation in both customer bases and technology sectors, this acquisition follows others in this space recently, including EMC’s acquisition of Smarts and Computer Associates’ acquisition of Concord Communications.
Lloyd Carney, chairman and CEO of Micromuse, said that while the company has been a successful standalone company, it was in a “no man’s land” of a $160 million to $200 million company where it didn’t have the breadth of coverage needed to address emerging market share.
“As a standalone company, the challenges we faced in competing against giants like Tivoli every day made us realize the best move for us would be to become a part of an organization and the best organization we could dream of becoming a part of was IBM and the Tivoli group,” Carney said. Micromuse recently partnered with Alcatel to demonstrate IPTV operations and business support systems (OSS/BSS) in Alcatel's integration lab in Plano, Texas. The company also was named as one of Alcatel's solutions partners delivering OSS solutions for SBC's IPTV launch.
Micromuse has more than 1800 customers worldwide, including America Online, British Telecom, Cox Communications, Deutsche Telecom, eTrade, NCR Corporation, NTT, Shanghai Telecom, Swisscom Mobile, Telecom Italia and Verizon. It will become part of the business unit within IBM's Tivoli software division led by Zollar.
Carney will report to Zollar upon the merger of their groups. Carney said his main focus would be ensuring the retention of customers and key employees and on executing the companies’ shared vision.
IBM will market and sell Micromuse software products through both company's worldwide sales channels and IBM Business Partners. IBM and Micromuse have more than 500 joint customers.
