Under the agreement, IBM will pay $18 for each outstanding Sequent share.The acquisition is designed to plug a hole in IBM's server line. IBM has been losing market share to rivals including Sun Microsystems Inc in the market for midrange servers, which are large computers used to tietogether corporate networks.

Sales of IBM's top two midrange server lines, the RS/6000 and the AS/400, are expected to be essentially flat this year, analysts say. IBM is "really losing momentum to Sun," said Don Young of PaineWebber.

IBM said it plans to wrap Sequent's line of computers into its own line of servers. Sequent, Beaverton, Ore., makes high-end servers that run using an array of chips from Intel Corp. The servers can run with as many as 64 Intel chips, allowing them to quickly process a huge amount of information.

The deal gives Sequent, which has never managed to break out of ahigh-end niche, access to IBM's sales and computer-services infrastructure. Sequent is expected to earn $13.2 million in 1999 on estimated revenue of about $840 million.

Initially, IBM said it will tap into Sequent's technology to produce a server that can run using both the Unix and Windows NT operating systems. Analysts said such a product would be appealing to customers looking to share data between the two popular operating systems as well as manage information from a central location.

--The Wall Street Journal