By Andy McCue, 23 January 2004 16:40
NEWS E-procurement company Ariba has announced it will acquire supply management software firm FreeMarkets for $493m in cash and stock.
Bob Calderoni, CEO of Ariba, said in a conference call that FreeMarkets' services-based sourcing and supply management expertise will complement Ariba's enterprise spend-management software suite.
"The deal just made more and more sense every day," he said. "Our customers need both breadth of applications and depth of category-specific knowledge."
Calderoni said the customer overlap is only around 20 to 30 per cent, with Ariba dominant in financial services, pharmaceuticals and retail, while FreeMarkets' main customers are in the manufacturing, automotive, oil and gas industries.
The combined company will retain Ariba's name and will be headed by Ariba's CEO Bob Calderoni. FreeMarkets' president and CEO, Dave McCormick, will become president of Ariba and will also join Ariba's board of directors.
The merged companies also expect cost savings of around $25m on an annualised basis because of improved operating efficiencies, according to Calderoni, and the joint operations will bring in approximately $360m in annual revenue.
FreeMarkets' McCormick said in the call that both companies will proceed with committed product deliveries as planned, although both product roadmaps are being examined with a view to eventually merging the applications into a single platform.
"We have not finalised plans in terms of how that migration will work," he said.
The purchase follows hot on the heels of Ariba's acquisition of hosting services company Alliente as part of a move into the pay-as-you-go software business.
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