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Bankrupt Peregrine sells unit to BMC

Software maker Peregrine Systems sells a unit responsible for service management products to BMC Software for $355 million in cash.

Software maker Peregrine Systems announced Thursday that it has sold a unit responsible for service management products to BMC Software for $355 million in cash.

Peregrine, which is trying to reorganize under Chapter 11 bankruptcy protection, sold its Remedy business unit--the maker of Action Request System software. The software is designed to help companies develop applications to automate such business processes as customer support.

BMC, a systems management software company, acquired Remedy to expand its offerings and plans to operate Remedy as a separate organization within BMC.

"This deal allows BMC to tell a better story in the marketplace," said David Breiner, an analyst with Bear Stearns. "By tying their technology-oriented management products with end-user products through Remedy, they are closing the loop from the data center to help desk."

Breiner said BMC had paid a fair price for the Remedy unit.

The sale of Remedy will ultimately make BMC a stronger competitor of Peregrine in the service management market.

"Although Peregrine can viewed as a competitor, their options were somewhat limited. It can be viewed as a small price to pay for viability," Breiner said.

Shares of BMC rose slightly in morning trading, up 19 cents, or about 1 percent, to $17.69.