IBM to buy Internet Security Systems

IBM Corp. will acquire Internet Security Systems Inc., an Atlanta-based provider of security solutions that protect against Internet threats across networks, desktops and servers.

ISS is a public company; IBM plans to acquire it in an all-cash transaction for $1.3 billion, or $28 per share. The acquisition is subject to ISS shareholder and regulatory approvals.

Government customers are a long-standing target market for ISS, said Tom Noonan, the company's president and CEO.

"Approximately 22 percent of our business today comes from governments of varying nations," Noonan said. "We think this aligns very effectively with IBM's industry orientation and [we] expect to continue to serve the government as a primary core industry for ourselves."

ISS software, appliances and services monitor and manage network vulnerabilities and exploits and respond in advance of potential threats. This acquisition is part of IBM's strategy to automate labor-based processes into software-based services.

This acquisition also reinforces IBM's position in the rapidly growing area of managed security services.

"[Managed services] is not an industry-specific move, this is a broad move within other industries like financial and telecom, to reduce the complexity and cost of providing security and protecting and defending their networks," Noonan said.

"It's very relevant in government and I think you will see even more growth in the government sector, where turn over is high among employees and the lack of coordination among departments makes [security] expensive and difficult," he said. "Privacy and security are critical to nations trying to protect their infrastructures."

Following completion of the acquisition, IBM intends to establish ISS' operations as a business unit within IBM's Infrastructure Management Services unit, part of IBM Global Technology Services.

IBM will also integrate ISS' software technology with Tivoli's IT service management portfolio, which includes software for Identity Management, Access Management, Service Oriented Architecture security and Security Information Management.