With the acquisition, Ariba, which makes software that enables companies to buy and sell products and services online, said it will add e-commerce products and services designed for companies who want to build an online marketplace, or Internet trading exchange.
In addition, Ariba said it will gain new network services from start-up TradingDynamics, which develops software that lets customers create any kind of auction, reverse auction or bid/ask exchange online.
In recent weeks, there has been a flurry of deals made within the fast growing business-to-business market, a market that is considered hot by industry analysts. Ariba rival CommerceOne two weeks ago inked a deal with carmaker General Motors to create GM MarketSite, an online marketplace for products, raw materials, parts and services. Database software giant Oracle and Ford also recently announced they're forming a venture called AutoXchange that will connect the carmaker to its global materials and parts suppliers over the Net.
Market research firm International Data Corporation projects the business-to-business marketplace to reach $1.3 trillion by 2003.
The TradingDynamics acquisition is also Ariba's latest move to partner with Internet exchanges, also known as so-called Net Market Makers, which bring together groups of buyers and sellers online.
The agreement is structured as a stock for stock merger, the two companies said in a statement. Ariba said the deal will be accounted for as a purchase and it will issue stock worth approximately $400 million to TradingDynamics stockholders.
Upon closing of the deal, Ariba said it will fold TradingDynamics into its operations and retain all employees. TradingDynamics Chief Executive Kirk Cruiskshank will report to Ariba Chief Executive Keith Krach. The company also said it plans to "aggressively" market TradingDynamics applications and services available today and begin immediate integration of the TradingDynamics products into the Ariba network.
Founded last year, TradingDynamics now has a little over 50 employees with a client roster that includes PlasticsNet, an online marketplace for the plastics industry, and SkillsVillage, an online marketplace for IT professionals.
Ariba said it will deliver TradingDynamics services hosted on the Ariba network in the first quarter of 2000. The transaction will close also in the first quarter of next year, the two companies said.
Reuters contributed to this report.