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May 25, 2010

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IBM buys AT&T's Sterling for US$1.4b

IBM Corp said yesterday that it is buying AT&T Inc's Sterling Commerce unit, which makes software that helps businesses buy and sell to each other, for US$1.4 billion.

The deal would be IBM Corp's largest acquisition since it bought business software maker Cognos in 2008.

Sterling runs "collaboration networks" where companies can interact with vendors. It has 18,000 clients worldwide and enables more than 1 billion deals per year, IBM and AT&T said Customers include H.J. Heinz Co, Motorola Inc, Boise Cascade LLC and Boston Market Corp. The parties would not provide a figure for the unit's annual revenue.

AT&T Inc, then known as SBC Communications, paid US$3.9 billion for Sterling in 2000, near the peak of the Internet bubble. The price tag was driven by forecasts that all "business-to-business" commerce would soon be conducted through online marketplaces not unlike a stock exchange, with demand dictating prices more efficiently.

The unit, which is based in Dublin, Ohio, has little connection to AT&T's main telecommunications business and has maintained its own brand.

AT&T spokeswoman McCall Butler said AT&T's business has changed since 2000, and Sterling is "no longer core to the company's long-term strategic objectives."

According to IBM, the deal complements its portfolio of business process integration and transaction software, which grew more than 20 percent in the first quarter of this year.

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