IBM Buys National Interest Security from D.C. Capital

NEW YORK (Reuters) – IBM (IBM.N), the world’s largest IT services company, said on Wednesday it would buy intelligence technology firm National Interest Security Co from private equity firm D.C. Capital Partners.

The purchase price was not disclosed, but D.C. Capital Partners will make nine times its original investment, realizing $180 million in equity value, a source familiar with the transaction said. D.C. Capital Partners invested $19.6 million in June 2007, the source said.

International Business Machines Corp said National Interest Security’s expertise in biometrics and systems engineering would contribute to its analytics business.

IBM has shifted its focus from hardware to more profitable software and services over the past decade and has recently positioned analytics as a key growth driver, as it yields higher margins than the average IBM product.

IBM’s analytics business incorporates advanced mathematics, and is combined with the company’s software and consulting services to help clients plot trends, predict risk and cut costs.

For example, it can help governments plan against pandemics and aid banks in fighting financial fraud. Police also use analytics to mine data to predict patterns of criminal behavior.

Last year, IBM bought business analytics company SPSS Inc for $1.2 billion in cash to better compete against rivals like Oracle Corp (ORCL.O) and SAP AG (SAPG.DE).

D.C. Partners declined to comment.

(Reporting by Megan Davies and Ritsuko Ando; Editing by Richard Chang)