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Tool maker overcome by Progress

Development tool maker Progress Software buys Java specialist Apptivity in a $13 million cash-and-stock deal.

Application development tool maker Progress Software (PRGS) will acquire Apptivity, a privately held Java tool specialist, in a cash-and-stock deal worth about $13 million.

The deal will give Progress a cutting-edge Java toolset and a new calling card with Fortune 500 companies, said analysts. Progress, based in Bedford, Massachusetts, is best known for its namesake fourth-generation language tool and database for client-server development, sold mostly to value-added resellers and application partners, said Tony Picardi, an analyst with International Data Corporation..

Apptivity, a 15-employee firm based in Newark, California, sells a tool called Apptivity for building multitier Java business applications. Progress claims Apptivity shipped $100,000 worth of development tools in May, the first full month of distribution for its toolset.

The Apptivity deal "allows [Progress] to get into a new segment of the market," Picardi said. "This gets them to where the action is--downloadable Java applets.

"Instead of following the market leaders, they can now compete with them, and add that leading-edge cachet to their name."

Apptivity will become a subsidiary of Progress and will remain in California. Purna Pareek, founder and president of Apptivity, will become a Progress vice president.

Progress plans to "double or triple" the current engineering efforts of Apptivity. Like many client-server tool makers, Progress is trying to move itself into the Web and Java-based tools business pronto. The company has been diversifying for the past several years, and sees Apptivity as a key piece of its tools lineup, filling a Java tool void.

Along with the Progress toolset, the company sells a variety of tools, including WebSpeed, for building transaction-based Web applications.

Web tools, not surprisingly, are making up a greater percentage of the company's overall revenue. WebSpeed accounted for three percent of Progress's license sales in its second quarter, which ended in May, up 50 percent from the previous quarter.

The Apptivity acquisition is expected to be finalized within two weeks, according to Progress. Progress reported revenues of $176 million in fiscal 1996.