Software AG Is Set to Acquire webMethods
Integration software provider webMethods is getting scooped up by Germany-headquartered Software AG, a systems software and service-oriented architecture (SOA) provider, for an all-cash offer of about $546 million. The transaction is intended is boost Software AG's footprint in the SOA/business process management (BPM) space and nudge it closer to its goal of becoming a billion-euro company by 2011. While the deal has been approved by Software AG's supervisory board and webMethods' board of directors, it is subject to customary closing conditions and expected to close during the second quarter of 2007.
The acquisition positions Software AG as one of the global leaders in SOA and BPM, according to Karl-Heinz Streibich, CEO of Software AG. "This is the merger of two strong players in their respective market segments," he said during a conference call.
Software AG's product portfolio includes Adabas, a database management solution; Crossvision, an SOA suite; Natural, a programming language; and Tamino, an XML database, while webMethods' offers products for integration, SOA, BPM, and business activity monitoring. While the deal brings together complimentary offerings, there is some overlap of functionality, according to Bill Swanton, vice president of research at AMR Research. The two companies are also complementary geographically. Whereas about two-thirds of Software AG's revenue comes from Europe and about one-quarter from North America, webMethods' revenue makeup is almost exactly the reverse, according to Swanton. Software AG has more than 3,000 customers, while webMethods' client base includes more than 1,500 customers.
"By joining forces with Software AG, we're able to fully capitalize on the highly differentiated and market-leading position that we've established for our products within the business integration, SOA, and BPM markets," said David Mitchell, president and CEO of webMethods, in a written statement. "Customers will benefit significantly from the greatly expanded product and service portfolio that we will be able to offer them. This combination will provide additional opportunities through our shared partner network, our combined geographical strengths, and our complementary business models."
"WebMethods has a great product," Swanton says. "The problem is that because of its [relatively small] size...it's had a hard time attracting new customers, it has [had] a lot of sales execution problems and things of that nature. What Software AG brings is some bulk; it is a bigger vendor. It has a very good history of delivering from a financial and sales point of view."
Vendors playing in this space, like BEA Systems and TIBCO Software, which "are both doing a good job at what they're trying to do," Swanton says, should keep an eye on the deal, as should firms like IBM and SAP. He adds, though, that the deal is "what webMethods had to do to really follow through on its dream of being a full-fledged SOA platform. It's a way of taking one of the best suites of software out there for doing this kind of work, BPM, and making it available to more people."
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