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IBM to spend $1.4 billion on a Sterling buy

AT&T is selling off Sterling Commerce, a company that tries to help businesses better share information with partners, customers, and suppliers.

IBM has signed an agreement to pay $1.4 billion to acquire business software integrator Sterling Commerce from AT&T, the companies said Monday.

Dublin, Ohio-based Sterling sells products designed to help companies more easily share information from different business systems with partners, customers, and suppliers. The goal is to help businesses create and customize these systems so they can better communicate and work with third parties.

Sterling has about 18,000 customers worldwide spread across financial services, retail, manufacturing, communications, and distribution, according to IBM. The company particularly focuses on cloud services to deliver its products.

"This acquisition will give IBM new tools to help clients build dynamic business networks that connect partners, suppliers, and clients and deliver a consistent customer experience across channels," Craig Hayman, general manager of WebSphere at IBM, said in a statement. "In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers."

Big Blue said that it believes Sterling's technologies complement its middleware products and that it expects the new combination will deliver more capabilities to IBM's customers in retail, manufacturing, communications, health care, and banking.

IBM added that it will continue to support Sterling's current customers and further develop Sterling's technologies to take advantage of IBM's existing products. IBM and AT&T expect the all-cash deal to be completed in the second half of 2010, subject to regulatory approval and closing conditions. Sterling's 2,500 employees will join the WebSphere division within IBM's Software Group.

AT&T--when it was SBC--bought Sterling more than 10 years ago for $3.9 billion--considerably more than IBM's purchase price. However, an AT&T representative told CNET News that the company considered the transaction fairly valued and that selling it is the right decision for AT&T from a business perspective. Over the past few years and now with the new deal, AT&T has recouped most of its investment in Sterling, the representative said.

AT&T expects to record a one-time pretax gain of around $750 million for the quarter in which the transaction closes.

The acquisition is just the latest in a huge shopping spree on the part of Big Blue. Over the past year, IBM's acquisitions have included cloud provider Cast Iron, enterprise software maker Lombardi, database security firm Guardium, and data analytics company Exeros.