IBM to Acquire FileNet to Advance Information On Demand Strategy

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ARMONK, NY and COSTA MESA, CA - 10 Aug 2006: IBM (NYSE: IBM) and FileNet Corporation (NASDAQ: FILE) today announced that the two companies have entered into a definitive agreement for IBM to acquire FileNet, a publicly held company based in Costa Mesa, Calif., in an all-cash transaction at a price of approximately $1.6 billion, or $35 per share. The acquisition is subject to FileNet shareholder approval, regulatory reviews and other customary closing conditions. It is expected to close in the fourth quarter of 2006.

FileNet is a leading provider of business process and content management solutions. This acquisition builds upon IBM's Information on Demand initiative, launched in February 2006, to address the growing market opportunity around combining IBM's software, services, partners and industry consulting expertise to improve clients' business performance. The Information on Demand strategy aims to provide clients with data exactly when and how they need it to improve their business processes, quickly respond to market needs and rapidly identify new business opportunities.

A convergence of challenges facing businesses today -- including globalization, mergers and acquisitions, information overload and regulatory compliance -- are driving companies to find new ways to gain insight from their information so they can use it to grow their business. IBM's acquisition of FileNet aims to further the company's Information on Demand initiative, IBM's strategy for addressing this growing market opportunity.

With information volumes growing and customers facing greater competitive pressures to be more responsive and efficient, enterprise content management (ECM) and business process management (BPM) are becoming more critical for improving business performance. IBM's acquisition of FileNet will allow customers to benefit from the combined capabilities of both companies -- from ensuring content is delivered and utilized in context of their business processes to achieving effective compliance, archiving and document retention.

IBM plans to build upon the advanced Content Management technologies of both companies to provide customers and partners with industry-focused, high value solutions that are able to proactively capture and deliver content as part of a business process. These technologies can be integrated into IBM's service oriented architecture (SOA)-based capabilities, including business process management and information lifecycle management.

"Freeing up information contained in content management systems is critical to unlocking the potential of information to improve business processes and performance," said Ambuj Goyal, general manager, IBM Information Management. "The combination of IBM and FileNet will provide our customers and partners with industry-focused content management solutions that offer a new level of business value."

Customers are making platform standardization decisions for ECM and are buying solutions that help build their core enterprise infrastructures. This requires open standards, a broader, integrated set of content management capabilities, and better integration with business applications, which reduces total cost of ownership.

"The growth in enterprise deployments of ECM and BPM technologies is fueling a global market expansion," said Lee Roberts, chairman and CEO of FileNet. "The combination of IBM and FileNet will deliver increased innovation and industry-focused content management solutions, enabling our clients, Systems Integrators, ISVs and other partners to create enhanced and more competitive solutions. At the same time, this transaction offers FileNet shareholders a solid premium over historical trading prices of our stock."

Following completion of the acquisition, IBM intends to:

Through this acquisition, the thousands of customers using IBM and FileNet solutions will now have a more powerful base of industry-leading content management products to build upon as they explore next-generation information management solutions.

Information On Demand

The desire by businesses to access, manage and deliver information more efficiently is driving rapid change in the information technology marketplace. Companies grappling with government mandates and business demands are striving to capture and integrate information in a more seamless, real-time fashion across their enterprises. IBM's Information on Demand approach combines industry-specific expertise with advanced software, open standards and storage technology -- integrated via a services oriented architecture -- to manage, secure and deliver information as a service to solve business challenges.

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