Telelogic: Telelogic's Board of Directors Recommends the Offer from IBM

Business Wire, June 11, 2007

MALMO, Sweden -- Statement by the Board of Directors of Telelogic AB (publ) in relation to the public offer from International Business Machines Corporation.

Summary

* Offer price of SEK 21 in cash per Telelogic share, which values the Offer at approximately SEK 5.2 billion.

* The Offer represents a premium of approximately (i) 21 per cent to the closing share price on 31 May 2007, being the last day prior to market speculation regarding a potential acquisition of Telelogic; (ii) 25 per cent to the average closing share price for the last 20 trading days up to and including 31 May 2007; (iii) 39 per cent to the average closing share price for the last 60 trading days up to and including 31 May 2007; and (iv) 42 per cent to the average closing share price for the last 120 trading days up to and including 31 May 2007.

* The Board of Directors of Telelogic unanimously recommends shareholders to accept the Offer. (Footnote 1)

* A press conference will be held at Operaterrassen, in Stockholm, today at 13.00 (CET). Details are set out below.

Bo Dimert, Chairman of the Board of Telelogic, said: "After carefully evaluating the Offer and considering the future prospects of Telelogic, it is the Board's opinion that the transaction is favourable to our shareholders. Therefore, the Board unanimously recommends this Offer. By combining with IBM, Telelogic will have a greater opportunity to accelerate its growth globally and be able to provide customers a more comprehensive solution for complex software development."

Anders Lidbeck, President and CEO of Telelogic, said: "This transaction creates potential for offering our customers further support in developing and implementing complex systems across the globe. Our combined customer base will now be able to leverage a full powerful end-to-end set of products and services. For our employees, the transaction has potential to create new, interesting opportunities worldwide in a leading IT company."

Background

This statement is issued by the Board of Directors of Telelogic AB (publ) ("Telelogic") pursuant to section II.14 of the Stockholm Stock Exchange Takeover Rules.

Today, International Business Machines Corporation ("IBM"), through its indirect wholly-owned subsidiary Goldcup D 2933 AB (with a proposed change of name to Watchtower AB) ("Watchtower"), announced a public cash offer to the shareholders of Telelogic to acquire all outstanding shares of Telelogic (the "Offer"). Telelogic's shareholders are offered SEK 21 in cash for each Telelogic share tendered.

Together, Telelogic and IBM will be able to expand and accelerate its customers' ability to define, model, build, test, deliver and govern the development of complex systems with higher quality and faster time to market. Telelogic will also benefit from access to IBM's worldwide sales and services organization.

After completion of the transaction, Telelogic will become part of IBM's Rational Software unit.

IBM has stated that it believes that Telelogic's employees, products and technology are, and will continue to be, very important for the continued successful development of the business. Furthermore, according to IBM, organic growth and acquisitions will continue to be an important part of the strategic development of Telelogic. The Board of Directors of Telelogic trusts that this description is accurate and has no different opinion.

For details regarding the Offer, please see today's offer announcement from IBM.

Members of the Board of Directors of Telelogic holding shares in Telelogic have irrevocably undertaken to accept the Offer and tender all of their Telelogic shares into the Offer. Those board members hold in aggregate approximately 0.5 per cent of the issued and outstanding share capital and voting rights in Telelogic. The irrevocable undertakings would lapse in the event that a third party announces a public offer to acquire all outstanding shares in Telelogic at a price per share that is higher than the price per share under the Offer. However, if Watchtower announces a revised Offer and such revised Offer receives the Telelogic Board's recommendation, the irrevocables would become binding again.

As set forth in IBM's offer announcement, IBM has offered and will offer relevant key people at Telelogic to be part of a separate bonus plan, a so called retention arrangement, provided that the Offer is completed at an acceptance level above 50 per cent of all Telelogic shares on a fully diluted basis. In connection therewith such employees have been requested to accept certain no-compete and non-solicitation undertakings to IBM. The Swedish Securities Council has accepted this arrangement, subject among other things to the Telelogic Board's prior approval. (Footnote 2) The Board has approved such an arrangement, provided that it be made conditional upon the Offer being completed at an acceptance level above 50 per cent of all Telelogic shares on a fully diluted basis. Further information on the retention arrangement will be set out in the offer document that will be drawn up and published by IBM for the purposes of the Offer.