D&B goes north of the border

Canadian client-server applications maker Geac Computer has signed an agreement to purchase Dun & Bradstreet Software Services in a surprise announcement today.

Geac will pay $150 million in cash and has 18 months to pay an additional $41.25 million for the company. The firms expect to close the deal within the next few weeks, ending a protracted divestiture process announced ten months ago by DBS's Atlanta-based parent company, D&B Corporation.

The agreement, essentially giving the company to the second-runner-up in DBS's buyer search, was signed this morning, canceling an earlier deal with the Boston-based investment house Bain Capital.

DBS chief executive Jim Schaper, who will step down once the acquisition is completed, said the company had failed to reach "closure" with Bain in time to meet D&B Corporation's previously announced plans to divest the unit and split itself into three publicly traded companies.

"We are absolutely tickled to death to have this behind us," he said. "Unlike the Bain agreement, this is a formal, signed, binding contract."

While Schaper admitted that uncertainty surrounding the sale has slowed the company this year, he said today's announcement will not interfere with DBS's plans to roll out its Java-enabled human resources application--a tool to give employees access to personal data such as benefit information via Web browsers--in the first quarter of next year.

On Monday, the company will also announce that it has Java-enabled its business applications to work with Sun Microsystems' network computer initiative.

"This is a huge market," said Barry Wilderman, a vice president with the consulting firm Meta Group. "It makes a lot of sense," he said, given the two companies' similar market presence. "The wild card is what happens with [DBS's] manufacturing and human resource applications."

DBS had reportedly been thinking about shutting down the manufacturing applications operation before today's announcement.

Bobby Cameron, a senior analyst at Forrester Research, said the company has been "shy" to invest in a full suite of manufacturing applications, making it difficult for them to compete against market leaders like SAP and Oracle.

Of the Java-enabled product rollouts, Wilderman and Cameron agreed that the Internet strategy will keep DBS in the game while the dust settles on the acquisition, but they will do little to lift the company above a half-dozen "third-tier" applications makers.

"They are neither distinguishing themselves or being left behind" by the move to the Internet, Cameron said. He quoted a recent Forrester survey in which two-thirds of 15,000 technology executives said they will make the move to the Internet by the second half of next year. All but 16 percent say adding browser front ends to their applications within the next three years will be important, very important, or essential.

Geac, an Ontario-based company with annual revenues of about $200 million from applications similar to some of DBS's products, will run the company as a separate division, but product names like the company's well-known SmartStream suite will remain the same.

Geac's strength in both manufacturing and human resource applications may lend DBS its strength in the area. Yet William Nelson, the company's chairman and CEO, declined to outline specific plans until he has a chance to take a closer look at the operations.

Nelson said the purchase fits in with the company's strategy to move aggressively into vertical market niches for client-server software and hopes to return the operation to the kind of momentum that led DBS to 150 percent growth in sales in 1995.

"We are very excited about the prospects. We are not sure exactly what to do next," he said. Nelson declined to say if it would result in layoffs or significant restructuring until he has mapped out a strategy for what will be a company with more than $500 million in annual revenue. He said he hopes to keep most of DBS "key players" inside the operation, which will continue to be based in Atlanta and run largely as an independent company.

While he said he does not "see great changes," Nelson alluded to the possibility of a restructuring, saying "there is a lot Dun & Bradstreet can learn about running a tight ship" from Geac.

The agreement is pending bank and regulatory approvals. If all goes well, Nelson said he might bring the new company public on the New York Stock Exchange or the Nasdaq market in about a year. Geac is already traded on the Canadian exchange.