Ascential Software to buy Mercator
Monday August 4, 4:34 pm ET
NEW YORK, Aug 4 (Reuters) - Ascential Software Corp. (NasdaqNM:ASCL - News) on Monday said it would buy rival Mercator Software Inc. (NasdaqNM:MCTR - News) for $106 million to expand in the market for software that allows different computer systems to communicate, sending Mercator shares up by more than 20 percent.
Ascential said it would begin a cash tender offer for Mercator's shares, offering $3 per share.
Mercator shares rose 50 cents, or 20.4 percent, to $2.95, trading just shy of that offer price on the Nasdaq. The offer is due to close by the end of the third quarter.
The deal signals more consolidation in the hard-hit software sector. PeopleSoft Inc. (NasdaqNM:PSFT - News) is fighting a hostile takeover bid by Oracle Corp. (NasdaqNM:ORCL - News), sparked by PeopleSoft's plans to acquire rival J.D. Edwards & Co. (NasdaqNM:JDEC - News).
In July, data storage company EMC Corp. (NYSE:EMC - News) said it would buy storage software company Legato Systems Inc. (NasdaqNM:LGTO - News) for 1.2 billion pounds and earlier this year International Business Machines Corp. (NYSE:IBM - News) bought Rational Software.
Ascential and Mercator compete against IBM and others in the market for so-called data integration software, which enables companies to stitch together their disparate computer systems to do business more efficiently.
But like the majority of the software sector, data integration companies have suffered as businesses have cut back on technology spending.
Ascential said it expects the deal to add to its earnings within the first year of the combination.
Separately, Mercator said its second-quarter net loss expanded to $9.2 million, or 26 cents a share, from its year-earlier net loss of $8.3 million, or 24 cents.
Total revenues fell more than 18 percent to $22 million, as key software license revenues declined almost 44 percent to $6.1 million.
Shares of Ascential fell 5.6 percent, or 90 cents, to $15.10 on the Nasdaq.
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