WASHINGTON: US computer giant IBM announced on Tuesday that it has agreed to buy business analytics software firm SPSS for 1.2 billion dollars in an all-cash deal.

IBM's has offered the Chicago-based company 50 dollars a share, a more than 40 percent premium over SPSS's closing price of 35.09 dollars in New York on Monday.

The companies said in a statement that the deal is expected to close in the second half of the year and is subject to the approval of SPSS shareholders and regulatory clearances.

IBM said the acquisition will expand its software portfolio and business analytics capabilities, which allow companies to better control costs and allocate resources through data capture, data mining and statistical analysis.

According to an IDC study cited in the statement, the worldwide market for business analytics software is expected to grow four percent over last year to 25 billion dollars this year.

"With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight -- but true foresight," said IBM's general manager for information management Ambuj Goyal.

"Predictive analytics can help clients move beyond the 'sense and respond' mode, which can leave blind spots for strategic information in today's fast paced environment -- to 'predict and act' for improved business outcomes."

IBM said predictive analytics technology can be used, for example, to reduce credit risk, increase customer loyalty and detect and prevent fraud.

"Clients will be able to identify which customers to target, how to reach them, when to make contact and the most appropriate action to take," it said.

"Predictive analytics will also be an essential component of the smarter business systems that IBM is helping companies and organizations build to help confront the complex challenges presented by the exponential growth of data."

SPSS, founded in 1968, employs some 1,200 people and has more than 250,000 clients around the world. Its revenue grew four percent in 2008 to 303 million dollars.

IBM announced meanwhile that it has acquired Ounce Labs, a privately-held company based in Waltham, Massachusetts that makes software designed to help firms reduce the risks and costs associated with security and compliance.

Financial terms of the deal were not disclosed.

"Ounce Labs solutions use advanced capabilities to scan software source code and identify potential security and compliance vulnerabilities during the earliest stages of software development," IBM said.

"Ounce Labs software can also help organizations to rapidly assess and remediate the level of risk posed to their businesses through their legacy applications."

IBM rational software general manager Daniel Sabbah said the acquisition would allow the company to "provide customers an end-to-end application security testing solution for managing security and compliance across all stages of the software delivery process."

Founded seven years ago, Ounce Labs has a clientele base that includes the US Defense Department and Lockheed Martin.

The purchases announced Tuesday came three months after IBM failed in a bid to buy Sun Microsystems, which was acquired instead by business software giant Oracle.

IBM's share price lost 0.34 percent to 117.23 dollars in early trading in New York on Tuesday.