Software AG, Europe's largest business infrastructure software provider, announced today the successful acquisition of webMethods (NASDAQ: WEBM), a leading business integration and optimisation software company.
With a deal value of $546 million, this merger is one of the largest pure software deals in the history of the European IT industry. The combination creates a new global leader in business infrastructure software, with over 4 000 enterprise customers worldwide, and is one of the largest independent vendors in the rapidly growing service-oriented architecture (SOA) and business process management (BPM) markets.
Software AG announced new financial guidance for 2007, with revenue forecast to rise by 30% to 35% compared to 2006 and EPS by EUR0.50 to EUR0.65.
"The merger of webMethods and Software AG brings immediate benefits to our 4 000 enterprise customers in over 70 countries. These benefits include a significantly strengthened product portfolio, expanded global services and support and unquestionable financial strength," said Karl-Heinz Streibich, CEO, Software AG.
"With a combined product roadmap already in place, we're fully committed to leading the market through continuing investments in technology innovation. Our exclusive focus on the business infrastructure software market, along with our unwavering customer commitment, is what ultimately differentiates Software AG."
"This merger is a partnership for growth that fully capitalises on the unique and complementary strengths of each company. Our unique combination of scale, stability and best-in-class technology means customers can choose the best solution for their needs without any compromises," said David Mitchell, President and CEO of webMethods.
Cross-vision business line to be renamed webMethods
Based on the high levels of awareness and the excellent reputation of webMethods in the integration software market, Software AG will leverage the webMethods brand for the combined integration product portfolio. The merger doubles the revenue in the integration area. It also creates a balanced revenue split between the new webMethods business line and Software AG's classic enterprise transaction systems business line.
The customers of both companies will immediately benefit from the increased financial strength and a combined product portfolio with unmatched depth and breadth including:
* Legacy modernisation, based on Software AG's expertise in mainframe systems.
* Integration, combining both companies' experience in the rapidly growing SOA market.
* BPM and business activity monitoring (BAM) utilising webMethods' business optimisation technology.
* SOA governance repository/registry, building on the leading technology from both companies.
"Together, Software AG and webMethods are a valuable combination for Motorola. We are continually looking for innovative ways to deliver business results, reduce complexity and increase the value of our IT investment. We expect the combined product portfolio of these two companies will deliver best-of-breed innovation for next generation technologies and services-oriented based architectures that are compelling, extend global reach, and continue to add value to Motorola," said Toby Redshaw, corporate vice-president of Motorola.
Synergies, new financial guidance for 2007
The company anticipates annual cost saving synergies of up to $50 million through process optimisation, location consolidation and increased back-office efficiencies. Continued investments will be made in retaining key research and development know-how and maintaining a stable sales force and customer relationships.
"This transaction is a major step in building a EUR1 billion company while at least doubling net income by 2011," said Software AG's Chief Financial Officer, Arnd Zinnhardt. "The execution of this strategy will drive the share price and enterprise value," he added.
Software AG is adjusting the full year guidance for 2007, based on the acquisition of webMethods. Overall revenue is expected to increase by about 30% to 35% at group level compared to 2006. The increase in licence revenue in 2007 is anticipated to be between 45% and 50%. As previously stated the acquisition will be EPS accretive in the first year, resulting in an expected EPS of EUR3.10 to EUR3.25.
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Software technology to increase the value of enterprise IT systems. Software AG's 3 000 global customers achieve measurable business results by modernising and automating its IT systems and rapidly building new systems to meet growing business demands. The company's industry-leading product portfolio includes best-in-class solutions for managing data, enabling service-oriented architecture, and improving business processes. By combining proven technology with industry expertise and best practices, our customers improve and differentiate their businesses - faster.
Software AG has more than 35 years of global IT experience and 2 900 employees serving customers in 70 countries.
The company is headquartered in Germany and listed on the Frankfurt Stock Exchange (TecDAX, ISIN DE 0003304002 / SOW).
Software AG posted total revenue of EUR483 million in 2006. www.softwareag.com.
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