IBM buys FileNet for $1.6bn

IBM has agreed to acquire content-management software maker FileNet for about $1.6bn in cash, the companies said today.

FileNet is a publicly traded company based in Costa Mesa, California, with an annual revenue last year of nearly $422m. The 24-year-old company is one of the largest specialists in content and document management software sold to large corporations.

IBM said that it will integrate FileNet's products with its own content-management software developed in its Information Management division, which is led by general manager Ambuj Goyal.

In addition, IBM said it will seek to combine FileNet's content-management software with its business process management tools for automating complex business workflows.

The acquisition price of $35 per FileNet share is only a slight premium over the closing price of FileNet's stock on Wednesday.

In a statement, FileNet CEO and Chairman Lee Roberts said the deal "offers FileNet shareholders a solid premium over historical trading prices of our stock".

The transaction is expected to close in the fourth quarter.

The acquisition comes only one week after IBM's software division spent $740 million to buy MRO Software, which makes applications for managing physical assets such as plants and refineries. IBM also purchased privately held Webify Solutons last week.

Folding FileNet into IBM underscores the rapid consolidation happening in the business software market. IBM's software group has bought more than 50 companies in the past 10 years.

In particular, the largest software companies, including IBM, Microsoft and Oracle, are expanding their product portfolios into content management for businesses.

Martin LaMonica writes for CNET News.com