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Ariba, EDS unit to team on B2B Net marketplaces

The professional services firm says it will partner with a new subsidiary of the information technology services group to build business-to-business Net marketplaces for joint customers.

Ariba today said it will partner with a new EDS subsidiary to build business-to-business Net marketplaces for joint customers.

Under the subsidiary, called EDS CoNext, the professional services giant said it will use Ariba's B2B e-commerce software to link groups of partners and suppliers that want to purchase goods and services over the Internet.

Through EDS CoNext, Plano, Texas-based EDS plans to build 12 Net markets and is expecting more than $160 billion in spending to take place within those markets. Initial participants include Bethlehem Steel, the Clorox Company, Entergy Services and Kellogg Company, along with Prudential Insurance, Tyco Healthcare Group and four other Fortune 100 companies, the company said.

Sunnyvale, Calif.-based Ariba's shares were up $15.31, or 9.05 percent, to $184.50 in afternoon trading, while EDS climbed $8.56, or 14.39 percent, to $68.06. At market close on the Nasdaq, Ariba shares were up $24.81, or 14.67 percent, to $194. At 1 p.m. PT, the close of regular trading on the New York Stock Exchange, EDS shares had fallen but were still up $4.50, or 7.56 percent, to $65.

Under the deal, EDS CoNext and Ariba will receive warrants to purchase each other's common stock. Ariba will receive warrants to buy up to 5 percent of EDS CoNext shares, while EDS CoNext will receive warrants to buy up to 7.3 percent shares of Ariba common stock.

EDS said the first Net market, which will include 12 participating Fortune 500 companies, could generate up to $17 billion. EDS said it plans to build at least 12 Net markets for more than 400 buyers organized by geography, market size or industry. A June launch date is planned.

EDS has moved aggressively in the B2B market, recently announcing plans to set up a venture fund with as much as $1.5 billion for B2B investments. EDS said it will rely on the auction expertise of its management consulting subsidiary, A.T. Kearney, for this latest deal with Ariba.

EDS chief executive Dick Brown also said an intial public offering of CoNext is a possibility sometime this year.