IBM Continues Buying Spree With Algorithmics Acquisition

The acquisition is the second in as many days for IBM, which said Wednesday that it had an agreement to buy i2, a U.K.-based developer of security threat and fraud detection applications, for an undisclosed sum.

Business analytics is a major focus for IBM and revenue from business analysis software and services grew 20 percent in the first half of 2011 for Big Blue. The company expects those sales to reach $16 billion by 2015. In the last five years IBM has made 25 business analytics-related acquisitions, including i2, totaling more than $14 billion.

IBM CEO Sam Palmisano has said the company will spend about $20 billion on acquisitions between 2010 and 2015.

Toronto-based Algorithmics develops risk analysis applications and other content used by banking, investment and insurance companies to help assess financial risk, make business decisions and comply with regulatory requirements. The company also provides risk assessment advisory services.

"Combining Algorithmics expertise with IBM's deep analytics portfolio will allow clients to take a more holistic approach to managing risk and responding to economic change across their enterprises," said Rob Ashe, IBM General Manager, Business Analytics, in a statement.

IBM will combine Algorithmics' software with its predictive analysis software and with the OpenPages risk and compliance management software it acquired in September 2010.

With that product lineup, IBM will be able to offer financial service industry customers a range of software to "quantify, manage and optimize their rick exposure across a range of financial risk domains, including market, liquidity, credit, operational and insurance as well as economic and regulatory capital," IBM said.

Algorithmics' 900 employees will join the IBM Software Group, the company said, while Algorithmics' risk advisers will join the risk consulting services offered through IBM's business analytics and optimization practice.

The acquisition is subject to regulatory clearances and other closing conditions, IBM said. Algorithmics is part of Fitch Group, which in turn is majority owned by Fimalac, a holding company based in Paris, France.