Rational, Borland shares rise amid buyout speculation

By Simon Aughton

Posted on 12 Dec 2002 at 12:29

Microsoft may make a bid for software company Rational, less than a week since IBM agreed to buy it for $2.1bn.

Speculation on Wall Street pushed Rational's share price up by 2.4 per cent as the volume of shares traded rose to six times its normal level.

At the same time shares in rival software developer Borland gained nearly three per cent following a television report that Microsoft could be attracted to it, should IBM acquire Rational.

Borland chief executive Dale Fuller told Reuters that as a public company Borland had to 'entertain all offers' but no deal is imminent, before adding that it has 'a very close relationship with Microsoft'.

Borland and Rational both make modelling tools that enable programmers to collaborate on software development prior to programs being built. Until now Rational has been Microsoft's biggest partner in this. Should it be acquired by IBM it would, said Fuller, open the door for Borland.

Borland tools can currently be used to build software both for Microsoft's .Net but also for the rival Java platform. Currently it derives half its revenues from each.

Microsoft, IBM and Rational declined to comment.