The merger will be a purchase transaction, the companies said. Commerce One will issue about 785,000 shares of its common stock and $4.5 million in cash to acquire CommerceBid. At current prices, the stock is worth about $227 million.
The deal sent Commerce One's shares soaring, trading this afternoon at 262.12, up 12.12.
The companies said they expect to close the deal next week.
Commerce One said it will use CommerceBid's auction technology to enable buyers and sellers that unite on the Commerce One MarketSite to take part in auctions and reverse auctions.
Commerce One executives said they picked CommerceBid for its technology capabilities and because the company's software can handle transactions involving foreign currencies and language differences that will take place during auctions held through the Commerce One global trading portal.
"We are convinced that CommerceBid has the best technology in the marketplace," said Commerce One CEO Mark Hoffman at a press conference held today.
CommerceBid, based in Santa Clara, California, has 30 employees and three customers testing its product, which is geared toward the business auction needs of Fortune 500 companies, according to company president Ramesh Balwani.
Commerce One's acquisition of CommerceBid follows Tuesday's announcement that the company plans to add a key player to its global buying and selling network: General Motors. Commerce One is building an e-commerce portal called the GM TradeXchange to which the automaker plans to shift $87 billion in supply chain purchases it makes each year.
Auction services will allow companies using the portal--such as auto parts suppliers--to bid on goods and services, as well as search for the best prices for what they need.
"The process and the relationship between a buyer and seller is one of the most inefficient in business today," said Kevin Schick, vice president of marketing at Commerce One. An auction environment will bring buyers collectively together to nab better prices on goods and services, while also enabling sellers to get a better price on goods they would have handed off cheaply to a liquidator, he said.
Business-to-business auction sales are expected to rocket from $8.7 billion in 1998 to $52 billion in 2002, according to Forrester Research.
"We consider auctions one of the highest value services in the marketplace," Hoffman said. "[These] capabilities are essential for us. The market for this type of thing is huge."