Ariba, Inc. (Nasdaq: ARBA) said Thursday that it will acquire privately held Tradex Technologies, Inc., which provides a business-to-business trading platform, in a stock-swap deal valued at $1.86 billion.
Ariba said the move will extend its expertise into buy-side e-commerce. The move also pits it directly against FreeMarkets (Nasdaq: FMKT), which launched a wildly successful IPO last week.
Under the terms of the deal, Ariba will issue shares worth $1.86 billion to Tradex stockholders, which represent about 13 percent of the fully diluted equity value of Ariba on a pro forma basis. The deal should close in the second quarter of 2000.
Ariba, which went public in June, said Tradex will allow the company to "to create the industry's first best-of-breed global B2B e-commerce platform." Ariba provides a network that allows business-to-business customers to build markets and integrate buyers and suppliers. Tradex provides commerce communities and counts American Express, EDS, Nippon Telegraph & Telephone, MetalSite, and Raytheon among its major customers.
The company said it can take another piece of the transaction pie with Tradex. Ariba takes transaction fees when goods move over its network and aggregates buying power for better pricing. Ariba (financials) had an operating loss of $4.6 million on sales of $17 million in its fourth quarter.
"We believe that, just as new dot-coms are emerging around every conceivable good and service in the consumer world, there will be net markets to serve every industry in the business world," said Keith Krach, chairman and CEO of Ariba, in a statement.
With Tradex in the fold, Ariba said it will form a new Net markets unit, headed by John Baumstark, chief operating officer of Tradex. Morgan Stanley Dean Witter advised Ariba on the transaction.
Business-to-business stocks have been among the best performing this year with Ariba, CommerceOne (Nasdaq: CMRC), PurchasePro.com (Nasdaq: PPRO) and VerticalNet (Nasdaq: VERT) showing impressive gains.