In a move aimed at strengthening its presence in the supply chain applications market, ILOG, today announced that it has entered into an agreement to acquire LogicTools, a Chicago-based provider of strategic supply chain planning solutions for approximately $15 million, of which two thirds will be paid in cash and one third will be paid in ILOG stock to be issued. The acquisition is expected to be completed in April 2007, and is subject to completion of customary closing conditions. As a consequence of this timing, the acquisition will have a negligible impact on ILOG's growth and U.S. GAAP profit in this fiscal year, and is expected to be accretive to the Company's U.S. GAAP profit in 2008.

LogicTools is a fast growing and profitable leader in supply chain network design and planning solutions as well as an innovator in the emerging inventory optimization space that industry analysts believe is strategic and essential to the next generation of supply chain management applications. In its Supply Chain Management Applications Report, 2005-2010, AMR Research noted that supply chain network design and inventory configuration, which includes inventory optimization, were two of the top growth areas for 2005 (the latest data available) at 21 percent and 35 percent, respectively. These trends are continuing, fueled by globalization, high transportation costs and growth in off-shoring.

The acquisition is expected to add LogicTools' more than 200 customers to ILOG's installed base of Global 500 companies in the consumer goods, retail and manufacturing markets. In addition, ILOG will acquire LogicTools' intellectual property, allowing the company to offer products and services that complement ILOG's recently introduced planning and scheduling applications. An ILOG independent software vendor (ISV) partner, LogicTools has used ILOG's optimization technology in its products for more than five years.

As part of the acquisition, ILOG will gain a research and development (R&D) site in Eugene, Oregon and an office in Chicago. All of the 43 LogicTools employees are expected to be made offers of employment to join ILOG. LogicTools' Chairman and Co-founder David Simchi-Levi will stay on as a consultant to ILOG. Co-founder Edith Simchi-Levi will continue as vice president of operations during the transition, after which she will assume a supply chain marketing role within ILOG.

LogicTools' customers and partners will continue to receive a high level of service and support, which will be enhanced by ILOG's worldwide sales and support network and corporate resources. ILOG intends to leverage its significant R&D and marketing efforts to continue the evolution of LogicTools products and services.

"Given ILOG's leadership position in resource optimization products and its long history of success in the supply chain market as a strategic technology provider to both corporations and software companies, including LogicTools, I can't think of a better company for our customers and employees to join," said David Simchi-Levi. "ILOG and LogicTools' complementary solutions will bring to the market the most advanced supply chain optimization capabilities. Our customers and partners will continue to receive the quality of service we are known for and LogicTools' employees will join a company with compatible culture and expanded opportunities for growth."

"This acquisition will significantly strengthen one of the three pillars of our strategy - supply chain planning and scheduling applications. The complexity and risks in the supply chain market have increased over time, requiring advanced decision support tools. The acquisition of LogicTools underscores our commitment to address the new challenges faced by global supply chains, and positions us to become a leading provider of supply chain analytics applications," said ILOG Chairman and CEO, Pierre Haren. "I know LogicTools well, and have the highest esteem for its technology and employees. Strong technical and sales synergies exist between our organizations. I'm also looking forward to meeting LogicTools' partners and customers and to helping ensure the fine tradition of customer care that LogicTools has established."

About LogicTools
Founded in 1995 by David Simchi-Levi, Professor of Engineering Systems at MIT, LogicTools provides strategic and tactical supply chain optimization applications designed to complement existing IT investments. LogicTools' product suite allows companies to make a wide range of supply chain decisions, from choosing the best strategic network design, deciding on the most efficient sourcing strategy to optimizing inventory placement throughout the different levels of the supply chain.

About ILOG
ILOG delivers software and services that empower customers to make better decisions faster and manage change and complexity. Over 2,500 corporations and more than 465 leading software vendors rely on ILOG's market-leading business rule management system (BRMS), optimization and visualization software components, to achieve dramatic returns on investment, create market-defining products and services, and sharpen their competitive edge. ILOG was founded in 1987 and employs more than 775 people worldwide. For more information, please visit www.ilog.com.