IBM to buy Sterling Commerce for $1.4 billion
IBM has agreed to acquire Sterling Commerce, a subsidiary of AT&T that provides an electronic platform for business-to-business collaboration in logistics and other functions, for $1.4 billion, the companies announced Monday.
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The addition of Sterling Commerce fits with IBM's transformation during the past decade from a predominant hardware manufacturer to a computer services and consulting firm. IBM exited the personal computing business and now focuses on mainframes, services, data centers, research, and supercomputers. Since acquiring PricewaterhouseCoopers Consulting six years ago, IBM's business model has evolved from one that mostly offered outsourced information technology service to one that helps companies re-engineer business processes, use analytics and optimization software to operate more efficiently, automate and develop a globally connected communications architecture.
Sterling Commerce provides software that enable companies to share information, exchange goods and services, and collaborate on a secure common platform with customers, partners and suppliers. Activities supported by its so-called value-added network include secure file transfers, selling, marketing, order management, fulfillment and logistics management. It facilitates electronic business transactions such as bank transfers, electronic sourcing of raw materials by manufacturers, automated stock replenishment and online order management.
Sterling Commerce was bought by SBC Communications (which subsequently merged with AT&T) 10 years ago for $3.9 billion. Dallas-based AT&T said its loss will be much less than the $2.5 billion sales difference because it has recouped most of its original investment through operating returns and tax benefits, in addition to the IBM purchase price, according to the Dallas Morning News.
IBM, based in Armonk, N.Y., said the Sterling deal would complement its products and services, especially in the supply chain applications market, by enhancing the ability of companies to integrate with and manage business partners through network or cloud computing models.
'Businesses today are operating in a highly competitive global environment in which lines between actions taking place within and outside an organization’s four walls are blurring,” said Craig Hayman, general manager of IBM's WebSphere. “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. In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers.”
The companies said they expect to finalize the transaction in the second half of the year.
Sterling Commerce is based in Columbus, Ohio. ' Eric Kulisch
