In the deal, Ariba offered 4.1 million shares of its stock for all outstanding shares of TradingDynamics. Based on Ariba?s closing price of $182 on Monday, the deal was worth more than $740 million.
As previously reported, Ariba will add to its portfolio of services TradingDynamics? e-commerce products and services. Ariba offers software that helps companies to buy and sell products and services online.
Market research firm International Data Corporation projects the business-to-business marketplace to reach $1.3 trillion by 2003.
"This is really adding more transition-based trading to the Net Market space," said Ariba chief executive Keith Krach. "It allows us to change the momentum of the market towards the Net Market area."
Net Markets are Internet exchanges that bring together groups of buyers and sellers online.
Former TradingDynamics president and chief executive Kirk Cruikshank will assume the role of executive vice president at Ariba and will run marketing and mergers and acquisitions divisions.
In recent months, a flurry of deals have happened within the fast growing business-to-business market. In November, Ariba rival CommerceOne inked a deal with carmaker General Motors to create GM MarketSite, an online marketplace for car parts and other services.
That same month, database software giant Oracle and car manufacturer Ford also recently announced a venture called AutoXchange to connect Ford to its materials and parts suppliers worldwide.
In related news, Ariba today announced that Diageo, one of the world's largest consumer goods companies, has selected Ariba to provide e-commerce and business-to-business services. Diageo manages such food and drink brands as Smirnoff, Johnnie Walker, Guinness, Pillsbury, and Burger King.