San Diego-based Peregrine provides inventory management and purchasing software intended to help companies manage systems such as information technology, telecommunications and transportation fleets. The company, which also provides software for corporate help desks, said it plans to fold Remedy's core line of CRM (customer relationship management) software and other products into its own, in an effort to sell customers a broader application suite.
Remedy, based in Mountain View, Calif., competes in the lucrative CRM software market against niche rivals such as Pivotal and Onyx. Its software helps automate a company's sales, customer service and marketing efforts. Remedy also sells help-desk applications.
Under the terms of the transaction, Peregrine said it will purchase all of the outstanding equity of Remedy in exchange for a combination of cash and shares of Peregrine stock. Peregrine expects to issue approximately 27.9 million shares for all of Remedy's outstanding shares. In exchange for each share of Remedy stock, shareholders will get $9 in cash and 0.9 share of Peregrine stock. The transaction represents a deal worth about $1.08 billion based on Peregrine's closing price Friday of $28.81, the company said in a statement.
In recent weeks, Remedy shares have been flirting with a 52-week low of $13.84. The stock, which touched a high of $56.81, closed Friday at $18.34. Meanwhile, shares of Peregrine have seen an uptick, climbing nearly 50 percent for the year. Its shares have set a 52-week high of $38.25 and a low of $13.
The deal has been approved by the boards of each company. Peregrine did not disclose when the transaction will be finalized.
On top of aiming to bolster its base of small to midsize customers, Peregrine is also entering the high-growth CRM software market. The sector, behind market leader Siebel Systems, has seen tough competition coming from software giants such as Oracle, SAP and PeopleSoft.
Gartner analyst Kris Brittain says Peregrine's takeover of Remedy is a significant move--although only for the better-capitalized companies--that proves there is life left in the sector.
With the Remedy buy, Peregrine hopes to deliver a broader and deeper set of applications. Remedy's family of products will become the flagship suite for small to midsize customers; Peregrine's software remains a provider for larger companies.
Peregrine said it expects the deal to add to cash earnings in its current fiscal year. The agreement is subject to approval by Remedy's shareholders, regulatory approval and other customary closing conditions.