EAI Market Consolidation Continues With Peregrine Acquisition of Extricity
Peregrine Systems, Inc. (NASDAQ: PRGN), a provider of Electronic
Market Enablement and Infrastructure Management solutions, announced that
it has signed a definitive agreement to acquire Extricity, Inc.
(privately held). Extricity will contribute its B2B relationship management
software as Peregrine creates a digital business offering that provides
a full range of software products and managed Internet services using
Peregrine's Get2ConnectSM global trading network. The
vendor intends for the combined offering to remove frictional cost from
collaborative commerce by seamlessly connecting businesses, people, and
two companies will leverage Peregrine's core competence in electronic
commerce transactions over a multitude of data formats - from XML to RosettaNet
to EDI - and its online catalog offering with Extricity's market-leading
business process and application integration software. The vendors state
"the result will be a new platform that represents a major shift in the
business landscape - helping companies move from batch-oriented document
exchange to real-time, process-based collaboration".
to Louis Blatt, senior vice president and general manager of Peregrine's
E-Markets Group, unrealized return on B2B investments will be decreased
"as we move buyers and suppliers beyond simple connectivity and discrete
document transformation to a continuous electronic dialogue. With Extricity,
we are assembling the platform required to link our customers' internal
business applications, then leverage that connection beyond the firewall
to build more productive business relationships for customers, suppliers
the terms of the agreement, Peregrine will issue approximately 9.2 million
shares of common stock for all of Extricity's outstanding stock in a stock-for-stock
tax-free reorganization. Based on a closing stock price of $18.3125, the
transaction value is approximately $168 million. It is expected to close
late in the March quarter or shortly thereafter. Peregrine will integrate
key product offerings within 90 days after the close.
number of vendors at least partially classified as Enterprise Application
Integration (EAI) vendors continues to shrink quickly. On the heels of
the Sybase acquisition of New Era of Networks
(NEON), IONA's purchase of Saga's Sagavista technology from
Software AG, and others, it is now clear that access to
capital for continued product development and marketing is becoming more
difficult for the smaller vendors, and partnerships and acquisitions are
the current solution.
has been a player in the market the vendor refers to as "B2B Relationship
Management", and has marketed an EAI product suite based on the Extricity
B2B Alliance Manager, a software server which supports the execution of
business processes, integrates back-end systems, and coordinates interactions
with external processes. In the current market it becoming increasingly
difficult to differentiate between a vendor in the B2B space and one in
the EAI space, since EAI could (perhaps arguably) be considered the "2"
in B2B. Perhaps less time should be spent by vendors in the marketing
of amorphous solutions, and more time spent explaining actual functionality
to the market and prospective customers.
Companies contemplating application integration technology selections
should first pay careful attention to the financial health and stability
of any vendor that they include on a long list of candidates. If a product
shows promise in specific areas of required functionality but the vendor
seems less than well funded, the prospective buyer should consider having
an "out clause" negotiated into the contract to protect their investment
in case of vendor or technology acquisition.
addition, as is always recommended by TEC, due diligence must be paid
during the initial phase of vendor evaluations to understand exactly what
it is the vendor is offering. In the EAI and B2B world of today, custom-made
acronyms and "buzz terms" with no industry standard definition are the
rule, not the exception. The proffered technology must be distilled down
to what functions it actually provides, so the vendor can be effectively
compared to its competitors.