IBM to buy risk analysis company Algorithmics for $387M

IBM said Algorithmics' focus on credit and market risks will strengthen its advisory practice

IBM plans to acquire risk analytics company Algorithmics for US$387 million, a deal that IBM said on Thursday will bolster its risk management offerings in light of increasing regulation in the financial markets.

Algorithmics, founded in 1989, is owned by the Paris-based holding company Fimalac and is a member of the Fitch Group. It provides analytics software and advisory services to 25 of the top 30 banks, including HSBC, Societe Generale and Nedbank, as well as insurance and investment companies, according to a news release. It has more than 350 clients.

The company's software is used to analyze credit and capital risks as well as risk in markets. IBM said there is demand for risk analysis following regulations imposed after the global financial crisis.

IBM said once the acquisition clears regulatory approval and closes, 900 employees from Algorithmics will become part of its Software Group. Risk advisors form Algorithmics will work with IBM's Business Analytics and Optimization practice, a team of 8,000 consultants. Algorithmics' operations are located in Toronto.

IBM said it has spent more than $24 billion in acquisitions for that practice, which has a network of analytics centers.

The acquisition is the second one announced by IBM in the last two days. On Wednesday, IBM said it was in the process of buying i2, a maker of security analytics software used by the military and law enforcement. Terms of that deal were not announced.

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