IBM To Buy FileNet for $1.6 Billion

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IBM yesterday said it agreed to acquire FileNet Corp. for $1.6 billion, or $35 a share. The price carries only a 1% premium to FileNet’s closing price Wednesday of $34.65 a share.

FileNet’s shares recently were trading up $0.95, or 2.7%, to $35.60 on volume of 11.5 million. Average daily volume is 616,100 shares.

At $35.60 apiece, shares of FileNet are higher than the offer price. Some investors and analysts are speculating that another suitor may step in and offer a higher price for FileNet.

Not only was the stock above IBM’s $35 takeover offer, but options that give traders the right to buy shares for $35 were still trading for a healthy price.

“People are anticipating a higher bid,”chief options strategist at vFinance Investments, William Lefkowitz, said.

Meanwhile, shares of Armonk, N.Y.-based IBM were recently up 31 cents, or 0.4%, to $75.72 on volume of 1.7 million. Average daily volume is 5.9 million shares.

IBM, a component of the Dow Jones Industrial Average, expects to close the transaction in the fourth quarter. During a conference call to discuss the transaction, FileNet’s chief executive, Lee Roberts, said the company doesn’t expect many layoffs at FileNet, which employs roughly 1,800 workers.

“The vast majority will move over to IBM,” said Mr. Roberts, noting that both companies have similar cultures. He said IBM and FileNet share 99% “commonality” in their strategies.


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