IBM acquires Sequent for $810 million

IBM acquires Sequent for $810 million

Bolstering its presence in the Unix and Windows NT markets, IBM announced on Monday it has agreed to a merger, valued at $US810 million, with Sequent Computer Systems.

IBM will pay $US18 cash for each Sequent share, according to Bob Stephenson, IBM senior vice president and group executive for the IBM Server Group.

IBM will sell Sequent's server products worldwide following completion of the merger, which is subject to regulatory and shareholder approval, Stephenson said. Sequent technology will also be integrated into IBM products. In addition, IBM will provide middleware support for Sequent's product line.

The two companies have already been working closely together on Project Monterey. Begun in October 1998, the project is expected to produce a Unix operating system that can use either IBM's 64-bit chip architecture or Intel's upcoming IA-64 chip, presently known as Merced. The Monterey project started in October 1998. In May the project demonstrated Monterey code running on a Merced simulator. The merger will accelerate work on the 64-bit Unix OS project, which is being developed with Santa Cruz Operation and Intel.

Stephenson and Casey Powell, chairman and chief executive officer of Sequent, said that the merger brings together two companies with complementary server technology. They predicted that the deal bodes well for the Unix market and for customers.

IBM's global strength will push Sequent's 64-bit work to fruition, Powell said, responding to a question from a reporter about why Sequent is interested in being bought at a time when that project is moving along and headed toward a product release.

"With this merger, we'll offer our customers the most complete and powerful server line," Stephenson said, adding that products from desktop machines to supercomputers will spring from the pairing.

Analyst Susan Frankle agreed that the Sequent acquisition is positive for IBM. Sequent will bring interesting technology to IBM in both the Unix as well as high-end Windows NT areas, she said. In addition, Sequent has some interesting high-availability technology, according to Frankle, an independent server analyst based in Boston.

IBM has not been the leading Unix operating system supplier, nor has it done a significant amount of business in the high-end Windows NT market, she said.

Sequent is known for its NUMA (non-uniform memory access) server architecture, which lets up to 64 Intel or compatible processors operate as a single system. IBM will market the NUMA-Q 1000, a midrange system that can handle four to eight Intel processors, and the NUMA-Q 2000 system, which can employ 64 processors. The Sequent technology will help IBM meet the needs of an increasing number of customers who want servers to manage unpredictable workloads or spikes in online traffic, Stephenson said.

IBM also will use the Sequent technology to address customers' desire to run combined Unix and Windows NT installations. Sequent's NUMA Center server runs Unix and NT in the same machine, using some processors to run the Unix applications and others to run the NT applications.

Sequent systems complement IBM's RS/6000 lines of servers, which is based on 64-bit processors running IBM's AIX -- a version of Unix. The RS/6000 started out in the scientific field but is also used in commercial installations now.

Sequent has more than 2500 employees worldwide and 56 sales offices. Founded in 1983, Sequent started out with symmetric multiprocessing (SMP) and NUMA systems for commercial environments. The NUMA Center, allowing mixed Unix and Windows NT systems to run together, was introduced in March 1998.

IBM stock has been up slightly since the announcement.

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