IBM is to snap up Watchfire, a company that develops software for identifying vulnerabilities in web applications and handling compliance. IBM said it would fold the company into its Rational division, adding Watchfire's security compliance and quality testing functions to Rational's software delivery tools.

The two companies are no strangers: Watchfire's 800 customers include IBM, Dell, Sun Microsystems and a host of others in the financial, pharmaceutical and entertainment industries. IBM's Global Services division is also a partner and reseller, according to Watchfire.

Watchfire developed its WebXM auditing tool in house, but obtained its flagship AppScan product through the acquisition of Sanctum in July 2004.

IBM expects to close the deal, for an undisclosed sum, in the third quarter, subject to regulatory approval.