Ariba Swallows TRADEX in $1.86-Bln Internet Deal
By Paul Simao
ATLANTA (Reuters) - Ariba Inc. (NasdaqNM:ARBA - news), the largest maker of Internet procurement software, said on Thursday its $1.86 billion takeover of TRADEX Technologies Inc. would create the dominant player in the electronic-commerce business-to-business industry.
Mountain View, Calif.-based Ariba, which helps companies coordinate purchases of computers and office supplies over the Internet, said the deal would produce a one-time charge of between $10 to $30 million.
Ariba Chief Financial Officer Edward Kinsey said the charge would be booked when the takeover of Atlanta-based TRADEX was completed, expected to occur during the second quarter of 2000.
Ariba trumpeted its deal with TRADEX, an online trading platform company that counts Japan's Nippon Telephone and Telegraph Corp. (9432.T) and American Express Co. (NYSE:AXP - news) among its clients, as part of an ambitious bid for market share and technical expertise in the fast growing world of Internet exchanges.
Internet exchanges, also known as ''Net market makers,'' bring together fragmented groups of buyers and sellers online for greater buying power. Market researcher Gartner Group has forecast there will be as many as 10,000 exchanges by 2002.
''We believe we are uniquely positioned to power commerce across both enterprise solutions and new net markets, accelerating the breadth and the reach of the Ariba network,'' Ariba Chief Executive Keith Krach told analysts and reporters during a conference call on Thursday.
''Together our combined assets make a powerhouse in B2B (business-to-business) commerce.''
Ariba said TRADEX would remain based in Atlanta.
The takeover was the second big deal inked by Ariba during the past month. In November, Ariba agreed to buy closely held TradingDynamics Inc. for $400 million in stock, adding a range of e-commerce products to help create Internet exchanges.
Under the terms of its latest deal, Ariba will issue about $1.86 billion worth of stock, based on Wednesday's closing price of $224 a share, to TRADEX shareholders.
The stock issue will represent about 13 percent of the fully diluted equity value of Ariba, which recently announced a two-for-one stock split.
Investors and analysts appeared to greet the deal with enthusiasm despite the price tag and one-time charge.
Ariba closed up 13-1/2 at 237-1/2 a share on the Nasdaq stock exchange.
''I think it's a fantastic deal for Ariba,'' said David Hilal, analyst with U.S. brokerage Friedman, Billings, Ramsey & Co., which has placed a 12-month price target of $300 a share on Ariba.
''When you look at the markets that Ariba is trying to penetrate -- the B2B market -- there are a lot of different segments of the market that people don't fully understand, but I think that Ariba has an excellent grasp on,'' Hilal said.
Hilal said he expected Ariba to be less aggressive in the acquisition arena in the months ahead, though he noted the company might seek out further partnerships in the direct materials market.
Earlier Stories
WRAP-Ariba Swallows TRADEX in $1.86-Bln Internet Deal (December 16)
-Ariba to Buy TRADEX in $1.86 Bln Stock Swap (December 16)
Ariba to Buy TRADEX for $1.86 Billion |
