IBM Announces Plans to Acquire BPM Provider ILOG

07/28/2008

IBM and ILOG today announced they have signed an agreement regarding a proposed acquisition by IBM of ILOG to be implemented by way of concurrent cash public tender offers in both France and the United States.

ebizQ received the following:

Through this proposed transaction, IBM will combine its business process management (BPM), business optimization, and service oriented architecture (SOA) technologies with ILOG’s Business Rules Management Systems software. This will enable IBM to help clients deliver critical business information in real-time, allowing them to make better business decisions faster.

The cash tender offer will amount to an aggregate purchase price of approximately $340 million on a fully diluted basis, and r represents a premium of approximately 56 percent based on ILOG's value, the companies said.

ILOG’s board of directors has approved the transaction between the two companies and, subject to the receipt of a satisfactory fairness opinion regarding the financial terms of the offer, is expected to give a final recommendation prior to September 15, following which the offer should be filed with the French stock exchange authority (AMF).

The public tender offers will be conditional upon U.S. and EU antitrust clearances and a 66.67 percent share capital and voting rights minimum tender acceptance condition (on a fully diluted basis). The offer in France will only be opened for acceptances once the AMF and the French Ministry of Economy have granted their respective clearances.

When completed, the acquisition of ILOG will strengthen IBM's BPM and SOA position by providing customers a full set of rule management tools for complete information and application lifecycle management across a comprehensive platform including IBM's WebSphere application development and management platform.

BPM enables companies to model, automate, monitor, and redesign business processes, such as opening a bank account, documenting a medical record, or customizing an insurance policy. It also enables companies to improve customers’ service and increase efficiency, automation and accuracy. Using BPM, companies can examine tasks within an organization – particularly those done manually or involving significant document processing – and apply BPM to automate or streamline them. Such processes are becoming increasingly critical as business operations become more complex and information volumes grow at phenomenal rates.

Building on IBM's existing capabilities, ILOG will help customers manage change and complexity in their business processes by providing business tools. For example, a business rule might be applied to elevate a premier customer to the front of a phone queue as part of a customer service process. ILOG's Business Rule Management System provides users with tools that allow greater control over the criteria that determine how and when to route those premier customers. As such, businesses can accelerate the process of initiating policy changes that may be driven by market trends or competitive activity to ensure customer satisfaction is maintained.

ILOG technology has the potential to add capability across IBM's entire software platform and bolster its existing rules management offerings, the vendors said. This includes improved rules and business optimization capabilities for Information Management offerings, better visualization for Lotus products, enhanced optimization within Tivoli solutions, and efficient supply chain management assets for planning and scheduling.

ILOG offers tools and technologies for business managers, analysts, architects and developers to use as they analyze, plan, track and improve business processes. Large enterprises use ILOG technologies to automate the allocation of scarce resources and to build smart interfaces into their business processes. Additionally, scientists and mathematicians from hundreds of universities use ILOG products for advanced research, design, and analysis.

"Companies across all industries are looking for technologies to help them manage their processes with more flexibility so they can keep up with changing business conditions," said Tom Rosamilia, general manager, IBM WebSphere. "ILOG's software allows businesses to more effectively manage and automate the decision making process, giving companies an opportunity to react with incredible speed and accuracy. IBM has partnered with ILOG for over a decade, and by adding ILOG's capabilities to IBM's software portfolio, this is a great combination to provide value to our clients."

Beyond end-user customers, ILOG has more than 500 original equipment manufacturer, solution integrator, and independent software vendor partners today. IBM also has a partner community which will benefit from access to the ILOG technologies and extend ILOG's reach. In addition to a successful network of more than 30 specialized partners and 850 personnel, ILOG brings extensive skills through a wide base of local and regional experts.

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