Analysts said the deal will help bolster Borland's programming tools lineup and increase its position in the emerging market for modeling and design programs, which let programmers build graphical representations of software.
The buyout marks the third acquisition this month Borland has made in the modeling and design sector. The companyStarbase, another toolmaker, in a $24 million stock deal, as well as BoldSoft, for less than $1 million, said Peter Goldmacher, a Merrill Lynch analyst.
Goldmacher said Rational Software currently has the mindshare in the modeling and design market and noted that TogetherSoft, though young, was becoming a respectable challenger.
With the buyout, "Borland is building out a product lineup that squares off more favorably against Rational than before. Borland's suite is definitely coming into Rational's territory," Goldmacher said.
Frank Slootman, Borland's senior vice president of software products, agreed the competition with Rational has increased.
"We have dialed up the competitive overlap with Rational," Slootman said. "But we are not viewing the world as Who is the enemy? and making sure we have what they have. What we're doing is looking at the?ecosystem of our customers and what they need."
Slootman said that as Borland seeks to expand its ability to handle customers' needs, it may continue with some smaller acquisitions to bolster areas it already serves.
However, he noted, "We won't be doing anymore large-scale (mergers and acquisitions) in the near future. They will be smaller in size."
Under the TogetherSoft deal, Borland will pay $82.5 million in cash and exchange more than 9 million shares of its common stock, which was valued at $11.34 on Tuesday. Borland's shares were up slightly in early morning trading, rising 7 cents, or less than 1 percent, to $11.41.
"By tightly integrating TogetherSoft's design and analysis technology with Borland's development solutions, we would enable companies to create business applications more quickly and to compete more effectively," said Dale Fuller, Borland chief executive, in a statement.
TogetherSoft, headquartered in Raleigh, N.C., markets an easy-to-use suite of tools for creating and running Java software. These tools allow programmers to build graphical representations of the software. But the young company faced stiff competition from Borland, IBM, Sun Microsystems and Oracle.
Through the deal, Borland acquires Java technology that TogetherSoft recently purchased. In August, itWebGain, which produced the popular Visual Cafe Java tools.
The deal will also bolster Borland's operations by by adding additional research and development centers along with 80 sales reps in St. Petersburg, Russia; Prague; and Raleigh, N.C.
Borland also plans to continue to invest in its JBuilder tools, as well as TogetherSoft's ControlCenter product lines. The goal is to create hybrid tools that integrate design and development for Java, .Net and other technology.
As, Borland is preparing to go head-to-head against Microsoft next year with new programming tools that allow developers to build software for Microsoft's Windows operating system and its overarching .Net software plans.
Borland's suite of tools, code-named Galileo, will be positioned to compete against Microsoft's populartool suite.
Microsoft, along with IBM, Sun Microsystems and Oracle, will continue to serve as Borland's main direct competitors as the company seeks to increase its software offerings, Slootman said. But, he said, "We also try to be like Switzerland. We want to be neutral to anyone's technology stack."