IBM buys Net Objects stake to stop rival bid

Manufacturing giant IBM will purchase a controlling stake in Web tools supplier Net Objects in a move designed to block takeover bids by rivals, while securing its relationship with the company.

The decision follows Big Blue?s disappointment earlier this year, when it was on the verge of signing a licensing deal with Vermeer Technologies, which makes Web site creation tools, only to lose out at the last minute when Microsoft took over the company.

To prevent such a situation happening again, IBM has now taken a majority stake in Net Objects after signing a definitive letter of intent, believed to be in the region of 60 per cent, with a value of $50 million to $80 million.

But IBM said it had decided not to go for a complete takeover because it would have upset the existing relationships Net Objects has with Microsoft, Oracle and Netscape.

An IBM representative said: ?The aim in taking a majority stake was that Net Objects could remain an independent company without us damaging its business. It would have been very difficult to maintain its relationships if we?d bought it up.

?We will have Mike Zisman [IBM?s Lotus executive vice president] as a representative on its board, but we won?t get involved in the day-to-day operations.?

She added that although Big Blue had not yet defined exactly what it intended to do with the Net Objects? Fusion tools, it planned to integrate them with its Lotus Notes for Domino package and Kona components, its DB2 database and its Visual Age development tools.

Fusion will also be resold as a complementary offering to Domino.action, a basic Web development tool, and Domino.designer, which has yet to be released, but is a higher-end, more sophisticated offering than Fusion.