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E-business ASP freecom.net buys financials vendor Systems Union

Fast-growing hosted e-commerce solutions provider freecom.net today announced the acquisition of midmarket financials software vendor Systems Union.

Recent London stock market debutant freecom.net Group has acquired a controlling 80 percent of Systems Union's privately-held share capital.

The acquisition will fuel freecom.net's strategy of developing as an ASP that offers integrated front- and back-office e-business capabilities to mid-market enterprises. It aims to build up its hosted e-commerce business around Systems Union's SunSystems applications, as well as benefiting from the vendor's substantial e-commerce development resources and international reach. London-based Systems Union, established in 1981, has sales offices in 26 countries and claims customers in 187 countries. Worldwide revenues in the year to 31st Aug 1999 were £73.3m ($120m).

"freecom.net wants to distance itself from the "cash burn" favoured by many Internet companies and cease to be considered as an Internet startup, as we are getting back to a profit model," said the company's CEO, Michael Williams, in a statement.

Paul White, Systems Union's group channels director, told asp-news that the acquisition solved three issues the software vendor was facing. "We didn't have the Web applications people are going to need straight out of the box," he said. Secondly, at a time when businesses are turning to hosting companies for e-business solutions, "we needed to develop new channels to market." And with an increasing trend towards mergers such as last week's acquisition of Solomon Software by Great Plains, "consolidation is a very real issue. We needed to lift our revenue growth to 60-70 percent," he explained.

"freecom.net made us an offer that very clearly allowed us to address all of those issues," he said.

The Systems Union acquisition is the latest in a string of expansionary deals by freecom.net. Earlier this year, it agreed the acquisition of another UK-based financials software vendor, Pegasus Group, after seeing off a rival bid by Australian software vendor and ASP Solution 6, and a potential bid from UK-based accounting software vendor Sage Group. (See related ASPnews.com story, New ASP bid for Pegasus, Jan 14th, 2000).

Oxford-based freecom.net joined London's Alternative Investment Market (AIM) stock market in Dec 1999.

Systems Union has a long association with the ASP market, having worked with IBM on one of the earliest-known ASP trials in the Czech Republic in spring 1998, and others in Mexico and Hong Kong (see related ASPnews.com story, IBM targets China with BCU, Oct 28th, 1998).

The vendor has a strong and extensive network of channel partners, many of whom have their own ASP projects under way. White said that the merged company believes the channel will play a key role in taking its products and services to market, offering customers a choice of installed, hosted and ASP-delivered solutions.

"We want our channel to have all of these three options available to them. This is about packaging solutions in such a way that the channel can take them to market," he said.