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IBM to Buy MRO Software for $740 Million

Posted on: Thursday, 3 August 2006, 18:00 CDT

By MARK JEWELL

BOSTON - International Business Machines Corp. on Thursday agreed to buy MRO Software Inc. for $740 million, giving IBM a niche provider of software and services to help customers including nuclear power plants and oil companies make the most efficient use of industrial assets.

The acquisition is expected to close in the fourth quarter, subject to approval of MRO's shareholders and regulatory reviews.

IBM, which has been a business partner of MRO in recent years, plans to fold MRO into IBM's Tivoli software unit.

Al Zollar, Tivoli's general manager, told analysts in a conference call that the acquisition was a response to customer demand for ways to integrate management software programs into single systems capable of handling a broad range of tasks. Examples include helping nuclear plants and refineries efficiently run their industrial operations, such as keeping equipment idle when it's not needed.

"We believe this positions us to address a broader set of client needs," Zollar said.

Zollar said the deal will enable IBM to provide companies "with a single view into all of their assets, helping them to maximize efficiencies, drive productivity, and innovate business processes across the enterprise."

MRO's customer list includes nuclear power plant operators and utilities as well as such companies as Exxon Mobil Corp., BP PLC, China National Offshore Oil Co., PepsiCo Inc.'s Frito-Lay division, Ford Motor Co. and General Motors Corp.

Armonk, N.Y.-based IBM is buying MRO for $25.80 per share in cash, representing a premium of 19 percent over MRO's Wednesday closing price of $21.60.

Shares of Bedford, Mass.-based MRO rose $3.86, or 18 percent, to close at $25.46 on the Nasdaq Stock Market. The stock was trading at its highest level since early 2002, and eclipsed its 52-week range of $13.68 to $21.89.

Shares of IBM rose 1 cent to close at $76.33 on the New York Stock Exchange, where the stock has traded in a 52-week range of $72.73 to $89.94.

Zollar said he didn't expect cuts to MRO's work force of more than 900 as a result of the acquisition. About 300 of those employees are at MRO's Bedford headquarters in suburban Boston.

Norman Drapeau, MRO's president and chief executive, will report to Zollar, along with the rest of MRO's executive team.

MRO, founded in 1968, reported revenue of $199 million in its most recent fiscal year.

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On the Net:

IBM Corp.: http://www.ibm.com  

MRO Software Inc: http://www.mro.com

Source: Associated Press/AP Online

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