Integration software company Tibco spends $217 million to buy Staffware. The two plan to push further into business process management, a category analysts say is poised for growth.
The two companies intend to combine their respective software lines and drive more sales in the industries where Staffware's customers are concentrated, including finance, insurance and telecom, the companies said. The Tibco offer represents a 40 percent premium over the closing price of Staffware's shares on Wednesday.
Tibco, based in Palo Alto, Calif., sells software for transporting information between corporate systems and had $264 million in revenue in fiscal year 2003. A pioneer in the area of messaging-based middleware, Tibco has seen its revenue slip during the past three years, as well as a spike in competition from other integration software companies offering less pricey products.
Staffware, which had revenue of $75 million in calendar year 2003 and employs about 370 people, builds so-called business process management software, sometimes called BPM, which is used to automate business processes.
"We believe business processes are rapidly becoming the most valuable corporate asset. This combination brings two best-in-class technologies together to more completely deliver value to customers investing in BPM solutions," Vivek Ranadive, chairman and CEO of Tibco, said in a statement.
Tibco said the transaction is expected to close by June.
The merged company will compete with other established integration software companies that offer business process management capabilities, including WebMethods, SeeBeyond, IBM, BEA Systems and several smaller specialized workflow companies.
Ron Schmelzer, an analyst at research company ZapThink, said that Tibco's acquisition of Staffware indicates that Tibco is looking to expand its portfolio beyond integration software. With much of the underlying software plumbing to move data between disparate systems being commoditized, Tibco needs to add other capabilities, such as business process management, he said.
"Tibco has seen its market eroded by standards and Web solutions and, while Staffware is excellent in its software built for business process management, it has lacked the U.S. exposure. They'll have a formidable offering if they can integrate their products successfully," said Ian Charlesworth, senior research analyst at the Butler Group.
Tibco and Staffware combined will be able to better compete against larger competitors, which are bundling business process management capabilities into wider offerings, said Philip Carnelly, software research director at Ovum.
"It's a sensible move. Both companies were doing quite well in business process management, but they both needed a shot in the arm," said Carnelly. "(Staffware) has done well with BPM, and I've been following it for years but 40 million pounds ($70 million) a year doesn't make it a very big player."
Ron Coates of Silicon.com in London contributed to this report.