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webMethods Gets Active (Software That Is)

Written By: M. Reed
Published On: June 7 2000

webMethods Gets Active (Software That Is)
M. Reed - June 7, 2000

Event Summary

On Monday May 22, webMethods Inc. (NASDAQ: WEBM) announced that it will purchase Active Software, Inc. (NASDAQ: ASWX) in an all-stock deal. The purchase is worth approximately $1.3 Billion. WebMethods is a vendor of B2B eCommerce integration software, and the acquisition of Active allows them to extend their integration strategy for extended supply chain and business-to-business e-commerce.

In an 8-K statement filed with the Securities and Exchange Commission, webMethods stated that a wholly- owned subsidiary of webMethods, known as Wolf Acquisition, would merge Active into webMethods with each issued and outstanding share of Active's common stock, at a par value of $.001 per share, to be converted into $.527 non-assessable shares of webMethods common stock. The transaction will be accounted for as a pooling-of-interests.

The president, CEO, and chairman of webMethods, Phillip Merrick, will stay in his current position. R. James Green, Active's CEO, will become the technology chief and executive vice president of the combined firm, as well as becoming a member of the board of directors. The companies expect the deal to close during the third quarter of 2000.

"Active Software is a front-runner in the application integration market with industry-leading technology, an experienced management team and a large, blue chip customer base", said Phillip Merrick, webMethods CEO. "By combining our product offerings, webMethods and Active Software are redefining the integration software market by delivering the first end-to-end solution that operates inside, outside, and across the corporate firewall."

Market Impact

Active recently entered into a marketing agreement with Acta (for more information see, "Acta Gets Active", May 25, 2000), and it will be interesting to see how this development affects the relationship. Other recent mergers in this same market space include Vignette's acquisition of OnDisplay, which had recently purchased Oberon Software, Alier's acquisition by Active, and Auxilium's acquisition by Parametric Technology (PTC). The Enterprise Application Integration vendor market is rapidly shrinking, and will probably continue to do so.

One of the results of the acquisition will be to allow webMethods to expand their international presence, since Active has offices in the United Kingdom, France, Germany, and the Netherlands. Since EAI is most important to large, multi-national corporations, this should help to increase their market presence. Some of webMethods existing customers include Dell Computer, Lucent, and Bell Atlantic. Active claims approximately 200 customers in verticals such as telecommunications, government, manufacturing, and transportation.

User Recommendations

Customers evaluating Enterprise Application Integration solutions should be cautious at this point. The market is beginning to coalesce and will contain fewer vendors within the next year (reduced to 10 major vendors within 12 months, 70% probability). Major vendors such as Vitria Technology, Tibco, Mercator, and New Era of Networks (NEON, not to be confused with Neon Systems), will continue to survive, but many of the lesser players in EAI will fall by the wayside.

Before considering the webMethods/Active solution, care should be taken to make sure that the development, support, and marketing staffs have been properly merged, and that the products' code bases have been combined, otherwise this is not much more than a marketing alliance from a product perspective.

 
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