IBM in Deal to Acquire Corio

IBM Corp. said Tuesday that it had agreed to buy software-management company Corio Inc. for $182 million in a bid to boost sales to smaller businesses.

IBM would pay $2.82 a share, or 38% more than Corio’s closing price Monday of $2.05. The cash purchase of Corio, which installs and manages software for companies, probably will close in 60 days, Armonk, N.Y.-based IBM said.

More small and mid-size businesses, especially those with 100 to 1,000 employees, want outside companies to oversee their software systems, IBM spokesman Scott Sykes said. The worldwide market for so-called hosted software will reach $8.1 billion in 2007, up from $2.1 billion three years ago, estimates market researcher IDC.

“IBM has tried to emphasize small to medium-sized companies because that’s where a lot of the spending growth in information technology is expected,” said Megan Graham-Hackett, a Standard & Poor’s equity analyst.

IBM shares rose 40 cents to $92.19 on the New York Stock Exchange. The stock has fallen 7.5% in the last year.

Shares of San Carlos, Calif.-based Corio rose 73 cents, or 36%, to $2.78 in Nasdaq trading. The stock has fallen about 14% in 12 months.

Corio has been a leader in the “hosted software” market since it was founded in 1998, according to IBM. The purchase is expected to enhance IBM’s ability to serve customers using software from companies including Ariba Inc., Oracle Corp., SAP and Siebel Systems Inc.

IBM’s sales to small and mid-size companies were $21.2 billion last year, almost 20% of total revenue, spokesman Sykes said.