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Vie Systems buy brightens Neon's strategy

Enterprise applications integrator Neon makes its second acquisition so far this year, pocketing a smaller market player, Vie Systems.

Enterprise applications integrator New Era of Networks (Neon) today made its second acquisition so far this year, pocketing a smaller market player, Vie Systems.

Denver-based Neon purchased all outstanding shares of the privately-held, two-year-old company. Financial details of the deal were not disclosed, but analysts said the acquisition price was less than $20 million.

For now, all 20 Vie employees will remain at their Lyndhurst, New Jersey location, and continue to support their flagship product, Copernicus, which, like Neon's products, are used to integrate disparate corporate applications, Neon spokesman Tom Kaser said.

Vie Systems CEO and cofounder Eric LeGoff will move over to Neon as a vice president, Kaser said.

Vie Systems has customers in travel, transportation, financial services, and retail markets, which will help expand Neon's distribution channels, the company said.

Among Vie's more high-profile clients are Delta Airlines, Marriott International, Canadian Imperial Bank of Commerce (CIBC), and U.K.-based Capital Bank.

Vie's business partners and distributors include PriceWaterhouseCoopers, IBM, Informix, and Microsoft.

The acquisition continues Neon's growth strategy--earlier this year Neon bought Hong Kong consulting company D&M Limited.

Since its founding in 1993, Neon, which collects about 55 percent of its revenues from the financial services industry and has a key joint development and marketing agreement with IBM, has grown to more than 700 employees and is expected to expand quickly, analysts said.

Boston-based Yankee Group estimates that the Enterprise Application Integration (EAI) market in which Neon competes will grow at a 40 to 45 percent rate over the next several years, reaching $780 million by 2001.

David Breiner, analyst with Volpe Brown Whelan, which rates Neon as a "strong buy," expects the company to grow much faster than the overall market--predicting 87 percent growth this year and 60 percent next year. Neon's rivals include publicly held TSI International Software and privately held Active Software and Vitria Technology.

"Neon will continue to be aggressive on the acquisition front," Breiner said, adding that the Vie acquisition gives Neon a line of lower-end products the company can sell as entry-level application integration offerings to departments within corporations.