The Pleasanton, California-based software company announced today it is buying TriMark Technologies, a maker of software for the life insurance industry. The purchase price is estimated at between $25 million and $30 million. Lincolnshire, Illinois,-based TriMark, which is privately held, had revenues last year of $14.5 million.
The deal comes on the heels of several moves by PeopleSoft to dig itself deeper into vertical markets, a trend sweeping the enterprise resource planning software industry. The company bought Intrepid Systems two weeks ago to bolster its retail offerings and cut a deal last week with Andersen Consulting to create profitability analysis tools for the financial and insurance sectors.
"ERP vendors have to move vertically," said Harry Tse, analyst at Yankee Group in Boston. "This is the fifth year into the major ERP replacement cycle. The next wave of growth is verticals."
TriMark's product line is meant to beef up the Andersen deal. Nearly half of PeopleSoft's financial industry customers are in the insurance business. TriMark makes software for the development and administration of annuity and life insurance products.
While the deal with Andersen brings high-end financial customers to PeopleSoft's front door, TriMark will do the same for the insurance industry with such high-profile customers as Mutual of Omaha, Allstate Life, and Citicorp Insurance Services.
But PeopleSoft is not rushing into the merger. TriMark will remain a separate entity for at least a year. During that time, PeopleSoft executives said TriMark's product line including its flagship Transcend product will be redeveloped with PeopleTools, PeopleSoft's development environment. This effort also could affect the eventual price of the transaction.
"Under the terms of the purchase and sales agreement, the amount of consideration which TriMark shareholders will receive may vary, depending on a successful redeployment of Transcend to PeopleTools, the profitability of TriMark during the next year, and the appreciation in PeopleSoft's stock price during the next year," PeopleSoft executives said in a prepared statement.
If the migration to PeopleTools is not successful, PeopleSoft's financial industry division vice president Steve Hill said the deal will still take place. But he noted that in reviewing TriMark for acquisition, PeopleSoft executives found the software could be migrated.