With the deal, WebMethods is aiming to offer a more complete package to help companies build online marketplaces, or trading exchanges. WebMethods will combine Active Software's enterprise application integration tools--software that lets business applications communicate with one another--with its own business e-commerce software, which lets companies do business with their partners and suppliers using the Net.
The acquisition will help expand WebMethods' growing international presence with the addition of offices in the United Kingdom, France, Germany and the Netherlands, the companies said in a statement. The newly combined company will have nearly 600 employees worldwide.
Ken Kiarash, a financial analyst at Buckingham Research Group, said the deal bodes well for both parties and that "technologically, it makes perfect sense" to combine the strengths of a front-end software maker with more heavy-duty back-end integration tools.
"(This deal) clearly puts them in the position as one of the leading e-integration solution providers, on par with a Vitria and Tibco," added Kiarash, who currently has a "buy" rating on Active's stock.
Both Vitria and Tibco have made headway in the EAI market, a sector that has recently mushroomed, primarily to keep up with the growing demand for tools that simplify the process of linking back-end computer systems to newer, Web-based applications. More recently, EAI software companies have generated a greater buzz surrounding their software and tools by targeting far more complex integration issues tied into the development of popular online marketplaces and trading exchanges.
Fairfax, Va.-based WebMethods, which markets its XML-based software in the lucrative business e-commerce market, went public earlier this year and has since enjoyed great success. XML, or Extensible Markup Language, is a Web standard for exchanging data that proponents say will allow companies to easily and cheaply conduct online transactions with customers and partners.
While a number of software firms, including Microsoft and Oracle, have publicly embraced XML technology in the past year, analysts have said WebMethods was one of the first companies to ship products with built-in XML support. Demand for such products is growing as more and more businesses continue to tap the Web for all their business needs.
Once the deal with Active is completed, Active's software products and operations will be folded into WebMethods. Phillip Merrick will continue as chief executive and chairman of WebMethods, while Active chief executive Jim Green will become chief technology officer and executive vice president. Green will also join the WebMethods board of directors, the companies said. Other Active executives will join the WebMethods management team.
Active said its Santa Clara, Calif.-based offices will become the West Coast headquarters of the combined company, which will operate under the WebMethods name. The two companies will have a wide range of clients, including Dell, Lucent, Bell Atlantic, Boeing, Starbucks and the Pentagon.
The transaction is expected to close during the third quarter of this year, pending the completion of customary closing conditions and approval from corporate shareholders as well as regulatory approval, the two companies said.