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IBM to Acquire Rational Software

The $2.1 billion acquisition boosts its offering of integration applications.
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IBM

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will spend $2.1 billion in cash to acquire infrastructure software development company

Rational Software

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(RATL)

, completing its portfolio of corporate integration tools.

IBM will pay about $10.50 a Rational share. They closed Thursday at $8.17 and were recently changing hands at $10.31 on the Instinet premarket session. IBM was downgraded by Salomon this morning and was recently off 1.3% to $81.95.

The acquisition strengthens IBM's offerings of programs that integrate data management, systems management, collaboration, transaction and business process integration middleware and software development in a corporate environment.

Rational is based in Cupertino, Calif., and Lexington, Mass., and employs more than 3,400 employees. IBM intends to merge Rational's business operations and employees into the IBM Software Group as a new division, joining WebSphere, Lotus, Tivoli and DB2.