COMPUTER BUSINESS REVIEW

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Issue Date: June 2007

Online

1 June 2007

Google and Software AG create a stir
Two topics dominated the ruminations in the 'blogosphere' this past month: advertising behemoth Google's acquisition of DoubleClick for $3,1bn, and Software AG's proposed $546m acquisition of integration and SOA management firm webMethods. Probably of more interest to enterprise IT buyers was US-based webMethods' acquisition by the Karlstadt, Germany-based Software AG, expected to close in June.
A blog by Ventana Research started off without promise: "If you own a system from webMethods you are about to become a Software AG customer," it began, stating the obvious. But things improved as it noted that, "[Software AG] is an interesting company, better known in Europe and worldwide than in US markets for its database, enterprise service bus, SOA enablement and governance software. That, in fact, is what is behind this acquisition; Software AG has realised the only rapid way to establish a US presence is to buy it."
Overall, Ventana's tone was pessimistic. "Can webMethods as part of Software AG continue to operate at the same level in the US as it did as a separate company? How will Software AG make this happen?" Adding, "I am not sure whether Software AG can deliver on the advancement of webMethods' technology."
A blog on IT Toolbox offered little additional insight, noting, "The challenge for Software AG now... is to integrate offerings from webMethods and offer a credible roadmap that will address the needs of existing and potential customers. Immediate gain from this acquisition for the company is a solid customer footprint in [the] North American market."
CBR felt it had a little more to add when it exclusively reported, and then commented on, Tibco CEO Vivek Ranadive's criticism of the deal online at www.cbronline.com. "Ranadive makes some valid points, particularly when it comes to webMethods' growth trajectory," he wrote. "He has reason to be bullish. While webMethods has had a tough time of late, Ranadive's Tibco managed to post sales for the fourth quarter of fiscal 2006 of $161m, up almost 20%, showing once again that Tibco has been able to leave webMethods and numerous other competitors in the integration space in its wake.
"The cultural differences between the German Software AG and US-based webMethods are another reason Ranadive has to be reasonably confident that integration of the two companies will not necessarily be straightforward.
"On the other hand, we believe webMethods' recent acquisition of Infravio was an inspired move that gave it much-needed strength in the registry/repository and services governance space, and it could well have helped webMethods claw its way back to the top table given some time. Trailing red ink and struggling to achieve consistent growth though, time was not on its side."
A blog on eBizQ, meanwhile, took a positive stance on the news. "Frankly, I find this truly exciting news," wrote Beth Gold-Bernstein. "While the consolidation trend is not exciting in itself (at this point there are few integration vendors left that have NOT been acquired) I think this acquisition is a true synergy. Each vendor has some very compelling solutions that are underappreciated in the market. Together the combination provides a complete infrastructure for SOA.
"I listened in to the analyst call this morning," Gold-Bernstein continued. "While I predict the financial geeks will find the numbers interesting, frankly from a purely technology view, I think this acquisition is positively exciting. Both companies have some industry leading next generation technology that has been underappreciated in the market. But while they were downplaying the overlap and playing up the synergies, there is actually considerable overlap that will have to be reconciled."
Finally a blog over at the finance-oriented Barron's Online was bemused by the fact that the investment firm Oliver Press Partners had only the day before webMethods' acquisition filed a note with the SEC disclosing a 6% stake in webMethods and asserting that the "stock was undervalued... the firm might seek board representation and that it would seek talks with management on ways to enhance shareholder value, including potentially the sale of company." As the blogger put it, "So it shall be written, so it shall be done."
Further reading
CBR’s Tibco CEO exclusive and follow-up comment:
Ventana Research:
IT Toolbox:
eBiz Q:
Barron ’s Online:


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