IBM Corp. said that it will pay $1.2 billion to buy SPSS Inc., a Chicago-based technology company that makes software to help companies analyze data and identify business trends.
The buyout values SPSS, a publicly traded company, at $50 a share, or more than 42 percent above Monday’s closing price of $35.09. In trading yesterday on the Nasdaq Stock Market, shares of SPSS soared $14.29 to $49.38.
Shares of IBM dropped 65 cents to $116.98 on the New York Stock Exchange.
The acquisition is expected to be completed before the end of the year if it receives shareholder and regulatory approvals.
The all-cash buyout expands IBM’s presence in the market for business analytics software that is designed to help companies develop a competitive advantage through the smart use of information that can help control costs, increase efficiency and boost profitability.
The global market for such software is expected to increase 4 percent this year to $25 billion this year, according to IDC.
“With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight—but true foresight,” said Ambuj Goyal, IBM’s general manager for information management.
IBM said that the addition of SPSS will allow it to offer products that are targeted at meeting the needs of major industries, including customer retention for financial services, patient care improvement data in the healthcare industry, crime prevention for the public sector and scouting site locations for retailers and manufacturers.
“This technology has also been used in political campaigns to zero in on likely voters to determine what campaign messages have the greatest impact on undecided voters,” IBM said in a written statement.
IBM has made about 80 acquisitions in hardware, software and services since Chief Executive Officer Sam Palmisano took the reins in 2002, according to Bloomberg News. Most of the deals, including the $4.5 billion purchase of Cognos Inc., have increased the scale of IBM’s software business.
In a second acquistion announced yesterday, IBM said that it bought Ounce Labs, Inc., a privately-held company in Waltham, Mass. Ounce makes software that helps companies reduce the costs related to security and compliance concerns. Financial terms of this buyout were not disclosed.