IBM Woos Sterling Commerce Away From AT&T With $1.4 Billion Bid

Big Blue is at it again, this time ponying up $1.4 billion in cash to acquire Sterling Commerce away from AT&T in a bid to boost its cloud computing presence.

Dublin, Ohio-based Sterling Commerce makes supply chain and business-to-business collaboration solutions that enable companies to work together with partners and suppliers across processes and technologies. Currently, Sterling Commerce boasts more than 18,000 customers globally. The software company became an AT&T subsidary in 2005 with the merger of AT&T and SBC Communications, which had owned Sterling Commerce since 2000.

The $1.4 billion buyout will bolster IBM's ability to build stronger business and cloud computing networks by automating how users connect and communicate with customers, partners and suppliers both on-premise or through cloud computing delivery models.

Though the acquisition of AT&T-owned Sterling Commerce, IBM will be able to integrate key business processes throughout the cross-channel solutions lifecycle and give clients the ability to manage networks of partners through public or private clouds. According to IBM, Sterling Commerce's portfolio includes offerings that compliment IBM's existing middleware offerings and tools that will boost IBM's inroads to other verticals including retail, manufacturing, communications, health care and banking.

The Sterling buy, which Armonk, NY-based IBM revealed on Monday, dovetails on other cloud-focused acquisitions for IBM, which most recently includes the purchase of Cast Iron Systems, a developer of cloud application integration services. Like the Sterling Commerce buy, IBM said the Cast Iron Systems purchase will expand its business process and integration software portfolio. The financial terms of that deal were not disclosed.

"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, WebSphere, IBM in a statement. "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."

IBM said the tying together of IBM and Sterling Commerce technologies will give make networks more efficient and enable integration beyond the enterprise.

"The broad global reach and additional capabilities IBM offers make this acquisition great news for our customers and partners," Bob Irwin, Sterling Commerce CEO, said in a statement. "The combination of IBM's products, services and skills with the Sterling Commerce B2B integration and cross-channel capabilities resulting from this acquisition is unparalleled."

IBM said it will continue to support Sterling clients and following the acquisition's close roughly 2,500 Sterling employees will be integrated into the WebSphere organization of IBM's Software Group. The acquisition is expected to close in the second half of 2010.

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