IBM to buy Micromuse

IBM will acquire Micromuse Inc., a network management software maker, in an all-cash transaction for $865 million, both companies said today.

The acquisition, which is subject to Micromuse shareholder approval, is expected to close in the first quarter of 2006.

Micromuse of San Francisco produces software to monitor and manage sophisticated technology infrastructures. The software helps customers manage complex IT systems that support voice and video traffic in addition to data. The growing popularity of voice over IP, audio and video services delivered over the Internet makes the software valuable, IBM officials said.

"Today's networks are no longer just pipelines of data. Customers are incorporating data, voice and video into their business operations at an astounding pace," said Al Zollar, general manager at IBM Tivoli software. "The combination of Micromuse and IBM Tivoli will help companies manage these sophisticated IT environments, deploy new business service management solutions, and deliver new network-based services to customers, employees and trading partners."

Micromuse has more than 1,800 customers worldwide, including the Securities and Exchange Commission, company officials said.

Following completion of the acquisition, IBM intends to establish Micromuse's operations as a business unit within IBM's Tivoli software division, incorporate Micromuse software technology and solutions into IBM's Tivoli software offerings as well as IBM hardware and services, and market and sell Micromuse software products through IBM's and Micromuse's worldwide sales channels and IBM Business Partners.

IBM also plans to capitalize on the two companies' business relationship, which includes more than 500 joint customers worldwide.

IBM, which has more than 329,000 employees and annual sales of $96.2 billion, ranks No. 14 on Washington Technology's 2005 Top 100 list of federal prime contractors.