IBM announces acquisition of FileNet Corp., to pay $1.6 billion for software that helps companies route data through business applications.

The $1.6 billion all cash purchase of FileNet marks the second major software acquisition for the Fortune 10 company. IBM spent $740 million in cash for MRO Software Inc. on August 3.

IBM’s push to become an all-purpose manager of “information on demand” for their clients has gained strength over the past five years. With over 35 acquisitions since 2001 the Armonk, New York based company has bolstered their most profitable division, software. 

The FileNet  deal falls in line with the IBM initiative announced in February in which it aimed to provide data for its customers in any manner needed to improve their business process, identify new opportunities in business, and respond to market needs in an accelerated manner.

With their software division representing close to 19% of total revenue, IBM expects to gain yearly growth of more than 10% over the next five years. IBM will face competition in the multi billion dollar market of corporate content management from Microsoft Corp and EMC Corp.

Closing on the FileNet deal is expected to take place in the fourth quarter of 2006 after shareholder approval.