IBM to buy Sequent Computer Systems

$810 million cash deal to get it parts, software

Technology

July 13, 1999|By BLOOMBERG NEWS

ARMONK, N.Y. -- International Business Machines Corp., the world's No. 1 computer maker, agreed yesterday to buy Sequent Computer Systems Inc. for about $810 million in cash to get parts and software for advanced computer servers.

IBM will pay $18 a share for Sequent, 29 percent more than Sequent's closing price on June 28, the day before a report said the companies were in acquisition talks. Sequent shares fell 16 cents to $17.28. IBM fell 31 cents to $137.06.

Sequent's components and software string together many Intel Corp. processors to handle big databases and process online transactions. IBM will sell Sequent servers alongside its own, adding machines that run Microsoft Corp.'s Windows NT and rival UNIX software as IBM competes with Hewlett-Packard Co. and Sun Microsystems Inc.

"IBM is preserving its options and wanting to be where the puck is going rather than where it was," said analyst Sam Albert, president of Sam Albert Associates in Scarsdale, N.Y.

IBM has paid more attention to Windows NT servers in the past two years as their popularity in corporations increases. Servers connect computers into a shared network, letting them swap files and other programs and communicate with one another. IBM also sells servers based on its own chips and operating systems.

Sequent's technology lets customers run applications on Unix and NT operating systems on a single computer system. Servers that can run both Unix and NT may become popular in coming years, analysts said.

Beaverton, Ore.-based Sequent fits into IBM's strategy to sell computers and software for online and electronic commerce amid the explosive growth of the Internet and related business.

Sequent's systems can connect as many as 64 Intel chips and run many programs from Oracle Corp., the world's largest maker of database software.

"This is right down the middle of our plans for electronic business and electronic commerce," said Robert Stephenson, IBM senior vice president and group executive of IBM Server Group.

IBM doesn't plan to fire any of Sequent's more than 2,500 employees, Stephenson said. The companies will keep the Sequent name on Sequent's products.

The companies hope to complete the acquisition within about 90 days, pending regulatory and shareholder approval, said Casey Powell, Sequent's chief executive.

Pub Date: 7/13/99

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