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Agile to acquire European competitor

The maker of engineering applications and other software buys Germany's Eigner, giving it a stronger foothold in rival SAP's back yard.

Agile Software, which specializes in manufacturing applications, announced this week that it has agreed to acquire German competitor Eigner, giving Agile a stronger foothold in rival SAP's back yard.

Agile and Eigner did not disclose the financial terms of the stock-and-cash deal, which they expect to complete next month. Eigner, which is privately held, has more than 250 customers, including Lockheed Martin and Siemens.

Eigner is the fourth acquisition this year for Agile, which was an acquisition target itself in 2001. Ariba, a high-flying e-commerce software company at the time, had agreed to purchase the San Jose, Calif., company for $2.55 billion in an all-stock transaction, but the deal fell through after Ariba's shares plunged more than 80 percent on reports of falling sales.

Agile, which counts Oracle, MatrixOne, PTC and SAP among its primary rivals, competes in the market for business-automation applications geared toward manufacturers that work with complex product designs and engineering processes.

In particular, SAP, based in Walldorf, Germany, is expected to become a more formidible competitor in the market, Agile said. "If we are going to compete against SAP or anyone else, we have to be strong in every geography," Agile Chief Executive Bryan Stolle said. One consideration in acquiring Eigner was that SAP was very strong in Europe, Stolle said.

According to a recent report from AMR Research, software that focuses on product life-cycle management is roughly a $10 billion market that has seen growth stagnate over the past year.

The report notes that companies such as Agile and MatrixOne have lost ground to larger suppliers such as IBM and SAP and that further mergers are highly probable.

Consolidation is increasingly likely, as users look to rationalize information technology suppliers, and PLM product life cycle management vendors struggle with outdated business models, the report states.

Agile plans on weathering the acquisition storm. "We have a strong balance sheet and a lot of cash," Stolle said. "We are in position to be an acquisitor."

Yet the future of this particular software market looks promising, the report says, because of several general trends in the manufacturing sector that make engineering more complicated and increase the need for tools to manage the process. These trends include an increased tendency to farm out design and engineering tasks to subcontractors, a rush to deliver a greater variety of merchandise to market to satisfy ever-shifting consumer demand, and a rise in custom-made products.

Agile's other acquisitions this year included OneRev of Cupertino, Calif., and ProductFactory of Maynard, Mass. Both were privately held and the terms of the transactions were not made public.