IBM to buy tools company Telelogic

IBM will spend $745 million to buy software-development tools company Telelogic, Big Blue said Monday.

Sweden-based Telelogic, which has about 1,100 employees worldwide and which has its U.S. headquarters in Irvine, Calif., makes software for developing complex applications.

IBM offered $3 (21 Swedish kronor) per share to purchase the public company, which had revenue of about $208 million last year. The IBM offer is a 21 percent premium over the closing price on May 31, which, according to Telelogic, was the last day before market speculation started over a possible acquisition.

Telelogic's application lifecycle management products are used to design, write and test software. Its software tools can be used in the creation of sophisticated products such as automobile braking systems or airplane radar, IBM said.

Telelogic's board of directors has offered its support for the deal, which must still be approved by shareholders.

The Telelogic software will become part of IBM's Rational division, which already sells application lifecycle management products. Acquisitions have become a vital part of IBM's revenue growth strategy.

IBM is hosting on its Rational Software Development Conference this week in Orlando, Fla.