Continuing its two-year acquisitions binge, electronic commerce software vendor Harbinger (HRBC) today announced it has acquired SupplyTech, an electronic data interchange (EDI) firm based in Ann Arbor, Michigan, for $44 million in stock.
The acquisition represents a major consolidation of the EDI software market. The two companies reported combined 1996 revenues of more than $60 million, making the new firm one of the largest EDI vendors.
EDI achieves commercial transactions by sending standard forms directly from one computer to another, without human intervention.
Torrey Byles, electronic commerce analyst at Giga Group, said the Internet is driving the consolidation. "In some ways it supplants EDI by doing electronic commerce through an easier means than EDI," said Byles.
Harbinger's stock price jumped 11 percent on news of the acquisition, closing at about 30-3/4, up 3-1/8 from Friday's close.
"We both share the same vision that EDI is going to be one of the key components of any electronic commerce trading relationship," said James Davis, president of Harbinger Group Operations. "We thought we could come out with next-generation products and services faster than either could independently."
Harbinger offers both EDI software and a secure private network, called a value-added network or VAN. It markets software that allows secure EDI over the Internet and is strong in the electronics, petroleum, food and beverages, financial services, and government sectors. SupplyTech, with operations in both Mexico and Europe, is active in automotive, aerospace, retail, and heavy manufacturing.
"We believe the industry is consolidating," Davis said. "The customers benefit by having someone who can bring more pieces of the puzzle to bear. We believe we will be a consolidator in industry, and we're not through."
Byles characterized SupplyTech as an aggressive and powerful vendor of EDI software.
"Whether or not this really brings a lot to Harbinger, the jury's out," Byles added. SupplyTech's software is used mostly by smaller firms that supply large manufacturers. "Harbinger has a lot more customers to boast about, but they may be second-tier customers, not the blue-chip customers that you really want."
Harbinger issued 1.6 million new shares to acquire SupplyTech and will take a charge of $7.5 million to $10 million this quarter for expenses of the acquisition. Nevertheless, Harbinger expects SupplyTech to boost its 1997 earnings, disregarding the charge.
SupplyTech will operate as a division of Harbinger under the name Harbinger Ann Arbor. Ted Annis, SupplyTech's cofounder and CEO, will be president of the new division.
Separately today, EDI software rival Premenos Technology (PRMO) today named Timothy A. Dreisbach as its new president and CEO. The job has been vacant since late October. Dreisbach was formerly senior vice president of North America field operations at Boole & Babbage.