IBM entered into a definitive merger agreement with a publicly-held company SPSS Inc. in an all cash transaction of $1.2 billion.

Headquartered in Chicago, SPSS Inc is global provider of Predictive Analytics(PASW) software and solutions. The company's product is used for education, marketing, government, survey and scientific research.

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 Ambuj Goyal, general manager, Information Management.

SPSS capabilities can help organizations analyze trends and patterns found in historical and current data to drive new forms of competitive advantage by predicting potential future outcomes and optimizing all elements of their businesses, including product and service offerings for customers.

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. Goyal added.

Through the acquisition, IBM can expand its focus on business analytics technology and services to cut costs, reduce risk, and increase profitability through predictive analytics capabilities. It adds a wide array of advanced analytic capabilities to IBM's IOD software portfolio

IBM intends to integrate SPSS within IBM's Information Management software portfolio and into the many industry offerings already available.

In a separate report, IBM also has acquired Ounce Labs Inc. a privately held software company in Waltham, Massachusetts whose software helps companies reduce the risks and costs associated with security and compliance concerns, for an undisclosed amount.

The acquisition of Ounce Labs allows IBM to provide customers an end-to-end application security testing solution for managing security and compliance across all stages of the software delivery process, said Dr. Daniel Sabbah, general manager, IBM Rational Software.

IBM will integrate Ounce Labs into its Rational software business.