IBM to Acquire Micromuse

IBM(IBM) agreed to acquire Micromuse(MUSE) for $865 million, extending a move into the network-management space previously dominated by huge telecoms like AT&T and MCI.

Micromuse holders will get $10 a share in cash. The stock closed at $7.21 Tuesday and recently surged $2.59, or 36%, to $9.80 on Instinet. Micromuse shares have traded in a 52-week range of $3.97 to $8.13 a share. They last traded in the double-digits in February 2004 after falling from nearly $90 in January 2001.

The acquiree sells network software to corporate customers like banks and governments. It specializes in products that manage and monitor systems using voice and video -- a business that is also prized by Cisco(CSCO) and Lucent(LU). IBM will fold Micromuse into its Tivoli unit.

"The combination of Micromuse's software and IBM's IT service management technology will provide customers with a comprehensive approach for reducing the complexity of their IT environments, lowering operational costs, and addressing compliance mandates," IBM says.

Micromuse, whose revenue rose 10% to $160.8 million in the year ended in September, lists customers including America Online, British Telecom, the state of Michigan and the Securities and Exchange Commission.

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