IBM Buys Watchfire

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IBM Corp. liked Watchfire Corp.'s Web application security software so much it plans to buy the company for an undisclosed sum, it said Wednesday.

Watchfire develops software for identifying vulnerabilities in Web applications and for auditing sites for compliance with regulations on corporate governance, data privacy or accessibility.

IBM plans to fold the Waltham, Massachusetts, company into its Rational division, adding Watchfire's security compliance and quality testing functions to Rational's software delivery tools.

The two companies are no strangers: Watchfire's 800 customers include IBM, Dell Inc., Sun Microsystems Inc., and a host of others in the financial, pharmaceutical and entertainment industries. IBM's Global Services division is also a partner and reseller, according to Watchfire.

Other developers of application security testing tools include Cenzic Inc. and SPI Dynamics Inc. Cenzic, in Santa Clara, California, has worked with application development tool specialist Borland Software Inc. in the past, and its current partners include IBM and Mercury Interactive, now a subsidiary of Hewlett-Packard Co.

Watchfire developed its WebXM auditing tool in house, but obtained its flagship AppScan product through the acquisition of Sanctum Inc. in July 2004.

IBM expects to close the deal in the third quarter, subject to regulatory approval.

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