IBM Buys ISS

ARMONK, N.Y. and ATLANTA -- IBM (NYSE: IBM - News) and Internet Security Systems, Inc. (NASDAQ: ISSX - News) today announced the two companies have entered into a definitive agreement for IBM to acquire Internet Security Systems, Inc., a publicly held company based in Atlanta, Ga., in an all-cash transaction at a price of approximately $1.3 billion, or $28 per share. The acquisition is subject to Internet Security Systems, Inc. shareholder and regulatory approvals and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2006.

Internet Security Systems (ISS) provides security solutions to thousands of the world's leading companies and governments, helping to proactively protect against internet threats across networks, desktops and servers. ISS software, appliances and services monitor and manage network vulnerabilities and exploits and rapidly respond in advance of potential threats. This acquisition advances IBM's strategy to utilize IT services, software and consulting expertise to automate labor-based processes into standardized, software-based services that help clients optimize and transform their businesses.

This acquisition also reinforces IBM's position in the rapidly growing area of Managed Security Services. With concerns ranging from data theft to implementing and managing increasingly complex regulatory requirements, addressing IT security has become one of the most complex challenges companies are facing, regardless of size, location or industry.

ISS augments IBM's ability to address this growing industry challenge by combining ISS' complementary automated security platform, services, software and expert consultants with IBM's broad security portfolio, innovative research and global reach. Together, IBM and ISS will help clients of all sizes preemptively stay a step ahead of targeted security threats or attacks.

The acquisition is an important addition to IBM's security and privacy services business. ISS' product line and extensive expertise complements IBM's long-standing security research efforts, consulting and managed service delivery capabilities, which currently provide security solutions to the heterogeneous environments of thousands of IBM's clients. ISS will join IBM as a business unit within IBM Global Services' Security organization.

"Companies recognize that rapidly evolving security threats and complex regulatory requirements have turned security into a mission-critical priority," said Val Rahmani, General Manager, Infrastructure Management Services, IBM Global Services. "ISS is a strategic and valuable addition to IBM's portfolio of technology and services. This acquisition will help IBM to provide companies with access to trained experts and leading-edge processes and technology to evaluate and protect against threats and enforce security policies."

IBM Corp. (NYSE: IBM)