Commerce One (Nasdaq: CMRC) revved up 20 percent Wednesday on news of a deal with General Motors Corp. (NYSE: GM) to link its suppliers, dealers and other businesses in a "virtual marketplace" for products, raw materials, parts and services.
Shares in Commerce One, which provides business to business electronic services linking buyer and suppliers of goods and services to trading communities were up 41 5/16 to 248 3/8 Wednesday morning. GM shares were down 7/16 to 67 15/16.
General Motors and Commerce One will create the GM MarketSite, expected to be in operation in the first quarter of 2000. The enterprise will operate on Commerce One's MarketSite global trading platform, which automates supplier interactions from order to payment. Commerce One lured some top talent to develop its Global Trading Web initiative last July.
Commerce One intends to issue GM warrants to purchase up to 4.8 million shares of Commerce One common stock after mutually agreed-to revenue targets are met. The warrants will become exercisable after the revenue targets are met. All of the terms of the deal were not released, and details of the arrangement won't be finalized until the fourth quarter.
The move represents GM's first major business-to-business, e-commerce initiative, the company said.General Motors said the site is expected to help businesses efficiency by streamlining purchasing and reducing purchasing cycle times, and expects the program to contribute to its revenue.