Philly article: ICG sets deal to expand market
The Wayne firm will work with a Hong Kong company on business-to business Internet
commerce in Asia.
By Miriam Hill
INQUIRER STAFF WRITER
NEW YORK - Internet Capital Group, of Wayne, which sums up its business strategy in the
video-game phrase "Game Over," expanded its share of the e-commerce marketplace with the
announcement last night of a deal with a Hong Kong holding company.
ICG said that it and a $65 billion Hong Kong conglomerate would create two companies to develop
business-to-business Internet commerce in Asia.
ICG and Hutchison Whampoa Ltd. would develop ICG AsiaWorks, which would invest in and
acquire Internet companies in Asia. The partners also would start a procurement-services joint
venture. Both new companies are to be based in Hong Kong. Financial terms of the potential deal
were not disclosed.
Earlier yesterday, Internet Capital announced that it would buy 53 percent of a private software firm,
RightWorks, for $657 million to expand its share of business-to-business marketplaces.
"We are trying to create a position of strength, which means 'Lights Out, You've Won, Game Over,'
" said Ken Fox, ICG's cofounder and managing director.
ICG paid $22 million in cash and approximately $635 million in stock for RightWorks, a San Jose
company that makes electronic-commerce procurement software for business-to-business
exchanges. The software enables companies with their own Internet marketplaces to communicate
with two of the largest business-to-business electronic markets, Ariba Inc. and Commerce One Inc.
RightWorks' customers include Aspect Development Inc., TradeMatrix.com, ShopNow.com,
VerticalNet Inc., and Wells Fargo & Co.
VerticalNet, a Horsham-based Web site operator that is one-third owned by ICG, said yesterday
that it agreed to acquire a private Internet software company, Tradeum Inc., of San Francisco, for
$475 million in stock.
Doug Alexander, an ICG managing director and chairman of VerticalNet, said the difference
between the two firms is that RightWorks' software facilitated communication while Tradeum's
emphasized price.
"RightWorks is a procurement engine that handles work flow, whereas Tradeum is a price engine,"
Alexander said. "It is used in spot markets for buying and selling."
Alexander and Ken Fox, ICG's cofounder and managing director, were attending an ICG
conference for some 200 institutional investors yesterday.
ICG's stock is almost 24 times its value when it went public in August, and it has a market
capitalization of about $36 billion.
In addition to VerticalNet, Internet Capital now owns stakes in four public companies: Breakaway
Solutions Inc., Emerge Interactive Inc., Onvia.com Inc. and U.S. Interactive Inc. Eight other
companies in which ICG has a stake have filed to go public.
At the conference, ICG's chief executive officer, Walter W. Buckley III, said ICG aimed to be in 45
of the top 50 business-to-business e-commerce markets by the end of the year, to be No. 1 in 20 of
those markets, and to take an additional 10 of its 57 portfolio-stakes companies public.
"This looks like a good technology," said Henry Blodget, Internet analyst at Merrill Lynch & Co.,
which was an underwriter of ICG's initial public offering. "In almost every software market, there are
usually three or four players, and, over time, the world begins to standardize around one player,"
which could be ICG.
"In e-commerce, there's not just a single buyer, but a supply chain, so it's very important that
software work with different technologies used in different parts of the supply chain."
Blodget said: "Internet Capital has been effective in making acquisitions because they are flexible
about when to invest in companies.
"Sometimes it's just after those companies are started. Sometimes it's when they are worth more
than $1 billion."
Hutchison Whampoa, which has 80,000 employees in 26 countries, has extensive holdings in
shipping, retailing and manufacturing, and recently has invested heavily in telecom projects. It entered
into an alliance with Priceline.com to introduce buyer-driven e-commerce to Asia, and teamed with
DLJdirect to extend investment services to the region.
ICG shares fell $3.05 to $38.13 yesterday, while Vertical Net went up $16 to $253.50.
This article contains information from Bloomberg News. |
