IBM Acquires Sterling Commerce for $1.4 Billion

This is very big news. IBM has announced it has entered into a definitive agreement to acquire Sterling Commerce from AT&T for approximately $1.4 billion in cash. The acquisition will expand IBM's ability to help organizations create business networks and help simplify and automate the way they connect and communicate with customers, partners and suppliers both on-premise and through cloud computing delivery models.

Sterling Commerce, which has a comprehensive multichannel direct commerce order management suite, currently serves 18,000 clients and a billion eletronic business transactions per year in the financial services, retail, manufacturing, communications and distribution industries.

According to Joel Reed, senior vice president product management at Sterling Commerce, the company will "not operate as a stand-along unit but will roll in under the Websphere group." Reed sees a lot of synergies between the two companies, especially in combining "Websphere's eCommerce capabilities with Sterling's order management, logistics and fulfillment."

The company believes that through this acquisition, clients will be able to extend the capabilities of their existing systems using, for example, IBM's rules management, analytics and business process management software.

IBM plans to continue to support Sterling Commerce clients and enhance Sterling Commerce technologies while allowing these organizations to take advantage of the broader IBM portfolio. Following the close of the acquisition, approximately 2,500 Sterling Commerce employees will be integrated into the WebSphere organization within IBM's Software Group.

IBM and AT&T expect the transaction to close in the second half of 2010, subject to regulatory approvals and the satisfaction of other customary closing conditions.

Update: Aug. 26, 2010: IBM has announced the closing of its acquisition of Sterling Commerce. The acquisition builds on IBM's growing portfolio of industry software solutions designed to help companies automate, manage and accelerate core business processes across marketing, selling, ordering and fulfillment. Says IBM: our  "recent acquisitions of Sterling Commerce and Coremetrics and the intended acquisition of Unica will enhance the company’s ability to support clients' needs in this growing market."