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BMC to buy Boole & Babbage

BMC says it will acquire mainframe software maker Boole & Babbage in a deal valued at $900 million.

BMC Software said today that it will acquire mainframe software maker Boole & Babbage in a deal valued at $900 million.

BMC, which has acquired a string of companies in recent months, makes utility and systems management software for corporate computer systems. The deal could make BMC the third-largest supplier of management software, behind IBM and Computer Associates.

Shares of BMC dropped 4.81 percent on the news while Boole stock soared 12.44 percent today.

Currently, many customers are using products from both companies already, so BMC hopes the combined product lines will provide customers with simplified management by providing tailored infrastructure, applications, and, ultimately, business process views across the distributed system for service level management.

Analysts say those customers already using both companies' products will enjoy the immediate benefits of the merger.

"For the long term, we'll just have to see what they provide for a combined solution," said Patrick Dryden, an analyst at Giga Information Group . "What will be interesting is when they show the road map. Will both products stay independent?"

The companies said detailed integration road maps will be published within 30 days following the acquisition closing date, which BMC said will come within two to three months.

Dryden said the merger adds to BMC's systems management offerings. "They went looking for help on getting a broad view of the infrastructure... They are still lacking network management."

BMC said the agreement will provide interoperability through common capabilities, alignment, and integration feature sets between the products. It also said the deal will strengthen customer services with an enhanced global distribution and support network.

"Both companies have made simultaneous technical decisions, like Web enabling decisions, and NT decisions," that makes the merger a perfect fit for the two companies as they move on, said Severio Merlo, senior vice president, marketing, Boole & Babbage.

BMC will issue 0.675 shares of its own common stock for each share of Boole & Babbage common stock. The transaction will be accounted for as a pooling of interests and will be treated as a tax-free reorganization for federal income tax purposes.

BMC will acquire an option to purchase up to 19 percent of Boole & Babbage's outstanding stock under certain circumstances. Boole also announced that because of the transaction it has rescinded its stock buyback program.

The combined company will employ approximately 4,400 people in 26 countries significantly increasing its global reach, according to BMC.