Logistics technology: IBM to acquire ILOG

Tech giant offering $340 million for software provider

Staff -- Logistics Management, 7/30/2008

ARMONK, NY and PARIS—IBM and ILOG announced today that both companies have signed an agreement for IBM to buy the business software manufacturer, paving the way for a multimillion-dollar deal. 

According to ILOG’s Web site, the company is based in France and California, has 850 employees worldwide, and recorded fiscal 2007 revenues of $161.5 million. Among its best known products is its Business Rule Management System software. 

“We are very excited about this opportunity to join a world leader such as IBM, a long valued partner with shared core values,” said Pierre Haren, ILOG’s Chairman and CEO. “This combination will allow us to dramatically extend our market reach and realize the full potential of all of our technologies while protecting investments of ILOG's customers now and into the future."

According to an ILOG press release on the acquisition, the company expects to combine its software with IBM’s business process management, business optimization and service oriented architecture technology. 

“Building on IBM's existing capabilities, ILOG will help customers manage change and complexity in their  business processes by providing powerful, yet easy-to-use business tools,” ILOG said in the release. “This will enable IBM to help clients deliver critical business information in real-time, allowing them to make better business decisions faster.” 

IBM’s cash offer will be €10 per European shares and the U.S. dollar equivalent per American shares. The estimated aggregate purchase price will be €215 million or $340 million. 

According to the release, ILOG’s board of directors has approved the sale, and will file the offer with the French stock exchange authority (AMF) next month.

The ILOG release indicates “certain shareholders” at IBM have committed to “tender their shares to the contemplated offer.” 

Tom Rosamilia, general manager of the division that produces IBM’s WebSphere software, said, "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." 

The offer still needs to be cleared by the U.S., EU and French governments before it can become officials. 

ILOG officials have indicated they plan to file what they call the “memorandum of understanding” between IBM and ILOG with the SEC today. A summary in French of the memorandum is available on ILOG’s Web site.