IBM to Buy FileNet

Big Blue keeps its software acquisition spree alive.
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IBM

(IBM) - Get Report

, which has been rapidly beefing up its already largesoftware operations, made its third acquisition in as many weeks,agreeing on Thursday to buy

FileNet

(FILE)

for $1.6 billion, or$35 a share.

IBM paid a very small premium for the content management company,which closed the evening before at $34.65. Last year,FileNet posted a profit of about $40 million, or 99 cents a share,on sales of $421.8 million.

In recent trading, shares of FileNet were up 78 cents, or 2.3%, to$35.43; IBM was gaining 49 cents to $75.88.

Content management has become a major focus of large businesses,struggling to manage ever-growing streams of data in documents,emails, Web pages and more. Last year, the market for contentmanagement software totaled $3.2 billion and it is expected to growby an additional 13% this year, according to IDC, a market researchorganization.

Storage giant

EMC

(EMC)

leads the highly fragmented market,followed by FileNet, IBM and

Microsoft

(MSFT) - Get Report

.

The acquisition was

not a majorsurprise; there had been rumors for some time that FileNetor one of the other players would be snapped up by a largerorganization seeking to expand its share of the market.

This is the third-largest software acquisition for IBM. Its largestwas Lotus in 1997 for $3.5 billion, followed by its purchase of Rational for $2.1billion in 2003.

Earlier this month, IBM acquired privately held Webify Solutions,which sells middleware that makes it easier to develop applicationsfor financial services and other specific industries. Last week, BigBlue purchased

MRO Software

(MROI)

for about $740 Million in cash, or$25.80 a share. MRO sells software and services to help businessesmanage, purchase and maintain and retire equipment and facilities.