1 April 2004 IBM is to acquire Candle Corp, the systems management software company that has held a grip on the mainframe performance monitoring market for the past 20 years.
With the deal, IBM acquires the Candle Omegamon performance suite and, of more strategic value, PathWAI, a highly successful set of tools for managing IBM WebSphere application environments.
Privately-held Candle declined to disclose financial terms, although the acquisition price is likely to easily exceed its 2003 revenues of $233 million.
All of Candle’s 800 staff will transfer to IBM. However, the company’s fiercely independent CEO and founder, Aubrey Chernick, who along with his family owns more than 90% of Candle’s shares, is not expected to make the move.
Candle, which is based in California, expanded rapidly in the 1980s on the back of a single, niche business: performance monitoring software for IBM mainframes.
Although IBM has launched several competing products over the years, Candle’s Omegamon toolset has consistently retained the market leadership position in this segment of systems management.
In the 1990s, Candle diversified into the area of software infrastructure performance monitoring, launching the PathWAI series of tools for tuning and testing applications developed and deployed on the IBM WebSphere platform.
Despite that move, Candle has suffered a steady fall in revenue in recent years as mainframe software prices declined. Indeed sales fell by 16% in 2003 alone.
The acquisition is expected to close in the second quarter of 2004.