IBM acquires Algorithmics for $387m

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The IBM booth at a trade fair in Hanover, Germany. Photo - Joerg Sarbach/AP

International Business Machines Corp. (IBM)has agreed to buy Algorithmics, a supplier of risk analytics software, for $387 million.

The purchase will add 900 employees to IBMs team of more than 8,000 consultants in the business analytics unit, Armonk, New York-based IBM said in a statement today. Algorithmics is a member of the Fitch Group.

IBM said its analytics offerings are backed by more than $14 billion spent on acquisitions in the past five years, including OpenPages Inc., a maker of compliance and risk management systems. IBM has forecast its business analytics and optimization activities will reach $16 billion in revenue by 2015 as companies sift their data for insights. Chief Executive Officer Sam Palmisanolast year said he would spend $20 billion on acquisitions within five years.

Combining Algorithmics expertise with IBMs deep analytics portfolio will allow clients to take a more holistic approach tomanaging riskand responding to economic change across their enterprises, said Rob Ashe, IBMs general manager of business analytics.

DATA DEAL

It is the latest acquisition in the data analysis sector. Last month,Hewlett Packard agreed to pay$11.7 billion for Autonomy, a British company that searches and keeps track of corporate and government information.

In 2009, the technology stalwart paid $1.2 billion for SPSS, which makes statistical software. The same year it also bought Ounce, whose software allows companies to assess the risks in their programming code.

With Algorithmics, IBM is pushing further into financial services. The companys client list includes 25 of the top 30 banks. Among its customers: HSBC, Nomura and Societe Generale.

Todays economic environment demands that financial institutions have more cash on hand, a better understanding of their financial standing and the ability to deliver more transparency to stakeholders, Rob Ashe, IBMs general manager of business analytics, said in a statement. Combining Algorithmics expertise with IBMs deep analytics portfolio will allow clients to take a more holistic approach to managing risk and responding to economic change across their enterprises.

On Wednesday, IBM said it was buying British security analytics software firm i2 for an undisclosed sum, as it continues to acquire companies that can help its clients deal with growing mountains of data.

ANALYTICS TECHNOLOGIES MERGE

This acquisition expands IBM’s business analytics capabilities in the financial services industry by helping clients quantify, manage and optimize their risk exposure across a range of financial risk domains including market, liquidity, credit, operational and insurance risk as well as economic and regulatory capital risk.

Across the financial industry, integrated risk management continues to be a challenge — made even more pressing by regulations triggered in response to the global financial crisis.

With the combination of IBM and Algorithmics’ analytics technologies, companies can measure and assess operational risk associated with lending processes, market and credit risk exposures.

IBM reported a surge in signings of new business at its services division during the announcement of its second quarter results, substantially beating Wall Street expectations and signaling businesses are still spending on technology.

Its shares rose 2 percent as the company also raised its forecast for full-year profit and released second-quarter results that beat Wall Street projections.

Algorithmics is the world’s leading provider of risk solutions. Algorithmics, based in Toronto, is a member of Fitch Group, which is majority owned by Paris-based holding companyFimalac (FIM)SA.

Sources: Bloomberg, Reuters, Nytimes, Ibtimes, Prnewswire

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