The companies said the merger will combine complementary product lines. Epiphany makes software that analyzes data collected from Web sites to determine the effectiveness of marketing efforts. Octane builds software that can be used within companies to measure customer relationship management.
"Both companies have the same vision of providing software that provides a single view of the customer to the company," said Roger Siboni, CEO of Epiphany. "Octane's software covers all touch-points where a company interacts with its customers. Where Epiphany stops, Octane begins."
The two software product lines should be integrated by the third quarter, company executives said.
Under the terms of the agreement, Epiphany will issue approximately 12.8 million shares of its common stock to the shareholders of Octane. Octane employees will make up about 40 percent of the 500 or so employees of the new combined company, which will be called Epiphany.
The company's stock got a boost after e-commerce giant Amazon.com said in October it would use Epiphany's analytical software for its retail site.
The purchase also gives Epiphany a needed entry into the business-to-business market. Among some of Octane's customers are a number of online marketplaces and exchanges, most notably Buzzsaw.com, the online collaboration and commerce hub for the building design and construction industry.
There are still some customer channels that are not touched by the Epiphany suite of products, most notably traditional sales force automation and e-commerce server technology, Siboni said. He said the company will continue to aggressively partner with other companies to plug those holes.
Although Octane was in the early stages of planning what was expected to be a successful IPO, CEO Tim Guleri said his company made the best decision to go with the merger.
"The chance to have an enterprise level sales force with Fortune 5000 customers made this a no brainer to go the way we did," Guleri said.
Epiphany, which acquired RightPoint for about $394 million in stock last year in a bid to improve its tracking of customer buying patterns, competes against other Web-based marketing software companies such as Personify and NetGenesis.
Together, Epiphany and Octane serve more than 125 enterprise customers in e-commerce, financial services, communications, consumer packaged goods and technology, including American Express, Autoweb.com, Charles Schwab, Compaq Computer, Critical Path, GTE, Hewlett-Packard, Internet Capital Group, Procter & Gamble and WingspanBank.com.