IBM has offered to buy Telelogic, a company that makes software development tools, in a cash deal valued at 5.2bn Swedish Kronor (£378m).
IBM plans to make Telelogic a part of its Rational development tools division. Telelogic makes products for managing complex software development projects, a category known as application lifecycle management. It also has tools for business process management and other areas.
Telelogic is advising its shareholders to accept the offer, which it said is a premium of 21% over Telelogic's closing share price on 31 May, when speculation began about a potential takeover of the company.
Telelogic chair Bo Dimert said that combining with IBM would allow his company to expand worldwide and offer a more complete set of products for software development. The offer requires approval from competition authorities as well as from Telelogic's shareholders.
Telelogic has about 8,000 customers, mostly in the aerospace, defence, telecommunications and electronics industries. Its UK office is in Oxford.
IBM, keen to demonstrate how the companies could work together, said that as an example an electronics vendor might use software from the two firms to design a smart home network for consumers that can control entertainment equipment, security systems and lighting.
In recent months, IBM has been working to eliminate some of the common problems affecting software development.
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