New phase for Peregrine HP to buy Peregrine for $425 million. That HP is building out its IT Service Management toolset is unsurprising; most of the company’s ITIL strength is in service delivery with availability and capacity monitoring, while its core service desk capabilities are weak or nonexistent. That’s a problem in this market, where the service desk is increasingly becoming a process center of excellence for IT Service Management and is an important part of any ITSM offering.

But that they would acquire Peregrine? Word on the street was that Peregrine was coming out of its near-death experience after its 2002 accounting scandals. But the company has still essentially lost much of its former market leadership. HP has gone into a lot of deals with Peregrine, so they must be pretty comfortable with their technology. The deal price is about 2.2 times annual earnings, so while not a bargain, it’s not a rip-off either. And the deal puts HP eyeball to eyeball with BMC, who purchased the other market leader, Remedy, from Peregrine three years ago. What a weird market.

Disclosure: My firm, iETSolutions, is another major player in this market, and my comments don’t reflect the opinions of the firm.