International Business Machines Corp. (IBM) has closed the deal to purchase SPSS Inc. (SPSS), a maker of data-analysis and statistical software. SPSS will be integrated into IBM’s Information Management software portfolio.

On July 28, IBM had announced that it would be taking over SPSS in an all-cash transaction at a price of $50/share, resulting in a total cash consideration of approximately $1.2 billion.

SPSS’s software helps predict companies what is lying ahead of them. We believe this acquisition is expected to further add to IBM’s already existing Information on Demand (IOD) software portfolio and business analytics capabilities Incorporatedluding Business Analytics and Optimization Consulting organization and network of Analytics Solution Centers.

We believe this is a great acquisition as it will also strengthen the information service initiative taken by IBM, where the companies use the strategic information for business growth.

SPSS’s technology is used for scanning data to predict customer behavior, or to detect a potential crime location, so that necessary precautions can be taken. The company claims to have customers such as U.S. state governments, top U.S. universities and consumer goods, pharmaceutical and market-research companies.

We believe this kind of software will be useful to IBM’s existing customers. In addition, IBM will get access to SPSS’s customers.

The acquisition of SPSS is in line with IBM’s strategy of strengthening its software and services divisions. IBM makes most of its money from software and services. The company has acquired around 50 software companies since 2003, all of which have proved profitable. We believe that SPSS too will make its contribution to the top line of the company.

We believe the deal is fairly priced as SPSS is currently trading at around $50. Moreover, IBM rose 1% following the announcement and closed at $119.02 on Oct 2.

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