The company will pay $3 per share to acquire Mercator. That represents a 22-percent premium over the stock's closing price on Friday of $2.45. The combined companies will have 3,000 customers and revenue of about $250 million.
Executives of both companies said the acquisition will create a suite of software tools for managing corporate data, in both transaction-processing systems and applications that analyze business operations.
Westborough, Mass.-based Ascential sells software that pulls information from various data sources, reformats it and transports it between different applications. Ascential's tools are used mainly for building databases that business analysts use to spot trends in historical sales data and other information.
Mercator, which is based in Wilton, Conn., also sells data-integration software, but its tools focus on systems for conducting transactions. The software routes data between businesses making transactions, such as commodities trades between financial services companies. Mercator has built data-integration software for specific industries, including financial services, health care and retail.
"Mercator's software for handling complex, high-volume transactions are a natural complement to our (analytical) technologies at Ascential," said Peter Gyenes, CEO of Ascential.
The deal comes after a string of acquisitions over the past two weeks involving companies that focus on data management or so-called business intelligence tools for analyzing corporate data.
for $820 million. A few days later, for $142 million. Last week, company Nimble Technologies.
Although Ascential's planned purchase of Mercator is not expected to increase competition with business intelligence companies, the combination will invite more competition from application integration software makers. Mercator's application integration tools compete with Tibco, WebMethods and IBM, according to Mercator executives.
A key goal of the buy was to create a larger company with a broader product portfolio that can address the data-integration needs of businesses and have the resources to compete with larger companies, Gyenes said.
This will probably not be Ascential's only purchase, said Ron Schmelzer, an industry analyst at ZapThink.
The company "wants to build a suite of architectural components, supporting tools, and a framework by which companies can mix and match integration technologies as they need," said Schmelzer. "I think this will be just the first of what will no doubt be a few notable acquisitions by this company."
Ascential's purchase of Mercator is also a lifeline for the company, which has been unable to find its footing financially, executives said.
"This proposed acquisition will remove the cloud of uncertain corporate viability that has hung over Mercator the last three years," said Roy King, CEO of Mercator. In the second quarter of this year, Mercator lost $9.2 million (on a GAAP basis) on revenue of $22 million, compared with $27 million in revenue for the second quarter in 2002.