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News > Deals
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IBM gets Rational
Big Blue agrees to buy software development firm for $2.1B cash.
December 6, 2002: 10:13 AM EST

NEW YORK (CNN/Money) - IBM said Friday it has agreed to acquire software development firm Rational Software Corp. for $2.1 billion cash, or $10.50 per share.

Armonk, N.Y.-based IBM said it plans to merge Cupertino, Calif.-based Rational's business operations and more than 3,400 employees into its software group as a new division and its fifth brand.

"Rational (RATL: up $2.08 to $10.25, Research, Estimates) helps software developers around the world write software faster, with less risk, and can help produce a higher return on investment," Rational CEO and co-founder Michael Devlin said.

Devlin will become general manager of the new division and will report to Steve Mills, IBM's vice president and executive of software.

IBM (IBM: down $1.18 to $81.88, Research, Estimates) said the acquisition will reduce its 2003 earnings by pennies per share. The company added that it expects the transaction to have a neutral impact on 2004 earnings and add to earnings thereafter.

The average Wall Street estimate for IBM's 2003 earnings is $4.31 a share, with estimates ranging from $4.11 to $4.60, according to First Call. The average First Call 2004 estimate is $5.06.

The companies said they expect the acquisition to close in the first quarter of 2003.  Top of page


--from staff and wire reports




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.