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Vignette buys OnDisplay in $1.7 billion stock swap

Vignette Corp. (Nasdaq: VIGN), an e-business software maker, said Monday it will acquire OnDisplay Inc. (Nadsaq: ONDS) in a stock swap valued at about $1.7 billion.

Under the terms of the deal, Vignette will issue 1.58 shares for each share of OnDisplay. The deal values OnDisplay at about 69 1/2, a healthy premium compared to Friday's closing price of 53.

Vignette said OnDisplay's XML-based business-to-business infrastructure products will complement its software tools such as the V/5 suite. With the deal, Vignette acquires access to a host of B2B exchanges and marketplaces.

The Vignette deal is the second extensible markup language (XML) deal of the day. WebMethods (Nasdaq: WEBM) bought Active Software (Nasdaq: ASWX) for $1.3 billion.

The companies said their combined products and services will allow businesses to automate transactions between suppliers and customers and coordinate operations with technology.

With the acquisition, Vignette will have about 2,000 employees, 870 customers and global operations, from the United States to South America, Europe, Asia and Australia, the companies said in a joint statement.

Vignette will account for the transaction using purchase accounting and expects to close the deal in the third quarter, subject to approval by OnDisplay stockholders and other customary closing conditions, the companies said.

OnDisplay's customers include W.W. Grainger, Sciquest.com (Nasdaq: SQST), FuelQuest.com, PurchasePro.com (Nasdaq: PPRO), Harbinger.net (Nasdaq: HRBC), Aspect Development and TPN Register. Some of the companies' 20 joint customers include The Associates Corporation, PurchasingCenter.com, QuestLink Technology, Inc., Sabre, Travelocity.com (Nasdaq: TVLY), The Tribune Corporation, and Trip.com.

In its first quarter, Vignette broke even on a pro forma basis, topping First Call estimates. Wall Street was expecting a loss of 2 cents a share. The company reported record revenue of $55.2 million in the first quarter, up 505 percent from $9.1 million a year ago. OnDisplay, which went public in December, reported a first quarter loss of $5.5 million, or 29 cents a share, excluding charges. Sales were $7.04 million.