IBM, the world's largest technology services firm, has agreed to buy business software and services provider Telelogic for about 5.2 billion crowns ($748.6 million) in cash, the Swedish firm said on Monday.
Telelogic said its board unanimously recommended IBM's bid of 21 crowns a share, which represents a 21% premium over Telelogic's closing share price on May 31, before it said it was in talks on a bid.
Shares in Telelogic shot up last week after its statement that it had received a conditional offer from an undisclosed bidder. They eased on Monday but held above the bid level, trading 0.9% lower at 21.30 crowns.
Analyst Johan Eliason at brokerage Cheuvreux said a counterbid from the likes of Microsoft or Sun Microsystems could not be ruled out, a suggestion backed by another analyst who asked not to be identified.
"I think a higher bid has got to come. And it will probably be from a competitor," the analyst said.
Telelogic said a combination with IBM offered growth opportunities.
"By combining with IBM, Telelogic will have a greater opportunity to accelerate its growth globally and be able to provide customers (with) a more comprehensive solution for complex software development," the company said.
"Telelogic will also benefit from access to IBM's worldwide sales and services organization."
Telelogic's board, whose members own shares corresponding to about 0.5% of the share capital and votes in the Swedish firm, have pledged to accept the offer.
Telelogic, whose staff of around 900 make a range of business software, would become part of IBM's Rational Software unit once the deal closes, it said.
Telelogic's board was advised by investment bank UBS.