Monday July 12 11:05 AM ET
IBM Buys Sequent for %810 Million
By DAVID E. KALISH AP Business Writer
NEW YORK (AP) - IBM announced today it would pay $810 million for Sequent Computer Systems Inc.
(Nasdaq:SQNT - news), a struggling maker of powerful business computers, in a cash deal that aims to fill
an important slot in IBM's product line.
Sequent is a leading seller of high-end computers and software that use Intel Corp.'s (Nasdaq:INTC - news) microprocessor
chips. IBM, the world's largest computer maker, plans to use Sequent's specialized technology in networked machines it will pitch
as an inexpensive substitute to traditional mainframes that handle the biggest computer jobs, such as tracking inventories or millions
of bank transactions.
Though Intel chips are not widely used as the brains in the heaviest-duty computers, that could change next year, when the No. 1
chip maker releases a long-awaited next-generation chip called Merced intended to work with big business machines.
Despite Sequent's leading technology, the company has succeeded only in attracting a handful of big corporate customers. Its
financial results have been viewed by Wall Street as mediocre.
IBM already is allied with Sequent and Santa Cruz Operation Inc. (Nasdaq:SCOC - news) to produce a new version of the Unix
operating system for Intel's high-powered Merced computer chip. That work helped spark IBM's interest in buying the company,
said Robert Stephenson, an IBM senior vice president who heads its server division.
IBM plans to sell Sequent's computers as well as integrate Sequent's technology into its own machines. Beaverton, Ore.-based
Sequent has about 2,500 employees. No job cuts are expected.
IBM will pay $18 cash for each of Sequent's outstanding shares, plus additional cash. It hopes to complete the transaction this
summer.
IBM shares were down $1.433/4 share at $135.933/4 on the New York Stock Exchange this morning. Sequent's shares were
down 183/4 cents a share at $17.25 on the Nasdaq Stock Market.
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