BMC Software To Acquire BladeLogic

Joel Strauch, Updata Advisors

In what had been a widely predicted response to HP’s acquisition of Opsware last summer and a highly complementary addition to its previous acquisition of RealOps, BMC Software announced last week that it would acquire BladeLogic, a data center automation software provider, for $800 million.  This deal represents another example of a large infrastructure software vendor paying a substantial multiple of trailing revenue (over 11x in this case) to stake a claim in a fast growing sector.  It is also a continuation of the ongoing consolidation that has been occurring among the “Big 4” infrastructure software vendors (IBM, HP, BMC, and CA) over the past several years.  Consolidation activity typically rotates through emerging fast-growth areas and represents a proven technique for bolstering growth, expanding customer “wallet share,” and unifying existing product offerings. 

The two most active areas include both BladeLogic’s target of data center automation as well as a closely-related and also fast-growing segment of virtualization.  We expect strong levels of M&A activity to continue in these sectors as BMC, HP, and IBM continue to pursue opportunities and as CA emerges from what has been a relatively quiet year on the M&A front.  In addition, activity in these sectors will be bolstered by other software vendors seeking to carve out a meaningful piece of the Big 4’s target market.  A good example of this is Novell’s acquisition of PlateSpin.