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Commerce One snags e-commerce software firm

Commerce One agrees to acquire e-commerce software company Mergent Systems in a stock and cash deal valued at $200 million and will join Cisco Systems' application hosting program.

Commerce One said it has agreed to acquire e-commerce software company Mergent Systems in a stock and cash deal valued at $200 million and announced it will join Cisco Systems' application hosting program.

Commerce One said it will combine Mergent's iMerge product and catalog management application with its set of business-to-business (B2B) e-commerce products.

The iMerge application is targeted at one of the challenges in e-commerce and online trading exchanges: creating and searching multi-vendor catalogs, Commerce One said in a statement. These catalogs integrate product information in real-time from multiple sources, such as manufacturers, distributors, vendors and partners,

Shares of Commerce One slipped in early trading, falling 11.5 points, or 5.6 percent, to 207. Shares closed at 214.50, down 4 points.

Commerce One, which makes B2B e-commerce software that allows companies to buy and sell goods online, competes in the fast-growing market against rivals Ariba, Oracle, SAP and a host of other software and professional services companies that have recently jumped into the lucrative market. The market for B2B is projected to expand from about $131 billion last year to $1.52 trillion in 2003, according to market analysis firm Forrester Research.

Under terms of the deal, Walnut Creek, Calif.-based Commerce One said it will issue approximately 870,000 shares of its common stock and approximately $10 million in cash to Mergent shareholders. Based on Commerce One's closing price yesterday of $218.5, the deal is worth about $200 million.

Through the acquisition, Commerce One said it's gaining technology that enables businesses to search through multi-vendor online catalogs regardless of the format in which they are published. Most companies still use proprietary terminology and data formats to represent their product information online, and they publish it through numerous channels including the Web, online databases and XML documents, the company said.

Mergent said it will set up a new Commerce One business unit, which will be led by Mergent CEO Amos Barzilay. The new unit will operate from Mergent's current headquarters in Mountain View, Calif. The companies said they expect the deal to close shortly in the first quarter of this year.

In other news, Commerce One announced it will join Cisco's application hosting program, which the network-equipment maker launched last April. Through the Cisco hosted applications initiative, Commerce One said it will deliver its BuySite software on Cisco's networking.

Under an application service provider (ASP) model, a customer rents software from the ASP, which manages the application remotely from a data center. The model eliminates the need for customers to hire staff to manage the applications.

Also today, Commerce One said it is forming a public sector business unit to provide e-commerce products for federal, state and local governments and agencies as well as higher education institutions. Commerce One has appointed Bill Goodson to oversee the new unit, which will be based in McLean, Va. Goodson, who has spent over 17 years of experience in the public sector arena, was a former sales director at database software maker Sybase where he was responsible for federal and defense accounts.

Reuters contributed to this report.