Update: Big Blue to buy Micromuse

IBM plans to acquire network-management software maker Micromuse in a $865m cash deal, Big Blue said on Wednesday.

The transaction is designed to enhance Big Blue's Tivoli software portfolio with Micromuse's network management offerings. Micromuse's software supports IT systems handling voice over IP (VoIP), video, and data traffic over the internet.

Micromuse software also helps companies monitor their networks and address issues such as network outages and performance problems.

The deal is expected to close in the first quarter. San Francisco-based Micromuse will become a business unit within the Tivoli software division. Micromuse's software will not only be integrated into the Tivoli software line but also into IBM hardware and services, the companies said.

Al Zollar, IBM Tivoli software general manager, said in a statement: "The combination of Micromuse and IBM Tivoli will help companies manage... sophisticated IT environments, deploy new business service management solutions, and deliver new network-based services."

Micromuse's Netcool software suite is targeted at industries such as banking, telecommunications, retail and government.

Steve Mills, IBM Software Group president, said: "Micromuse's tools will be available after the [deal's] close, as they are now. Micromuse's capabilities in network management will be the centrepiece of this area, as we build it out."

Micromuse, an IBM partner for the past few years, will mark Tivoli's third acquisition this year, Mills said.

He noted that although IBM already has middleware products, software that allows applications to communicate with one another, it wanted to fill some gaps in its physical network management offerings, especially in light of the strain on networks caused by VoIP and TV via the internet.

Dawn Kawamoto writes for CNET News.com