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Applicast & Agilera to Merge

In the emerging ASP market there is plenty of jockeying for leadership positions as new players appear and others fall by the wayside. The latest claim for top billing comes today from Agilera, the Englewood, CO-based ASP which announced plans to merge with Menlo Park-based Applicast, in a stock-for-stock transaction. The combined entity will create what's believed to be the largest, privately held, full-service ASP.

'"Scale matters," says Applicast CEO John McGrory. "All the analysts and smart people believe in the ASP business model. The problem in the market is that some ASPs have become very prominent on unproven business models and got hammered because they didn't have long-term sustainable plans. The point of this merger is that it's really a growth story. We're doing this in a way that is really additive and really synergistic."

McGrory says there will be few layoffs (single digit at most) as a result of the merger. But his own future role has yet to be determined. "For now I'm still here."

Applicast will become part of Agilera and operate as the company's Western Region Operations Center in Menlo Park once the merger receives regulatory approval. The two companies have complementary products and resources.

"Applicast is a full-service vertical ASP focused on the manufacturing industry that has a solid track record of delivering productized ERP (enterprise resource planning) and CRM (customer relationship management) solutions, such as Siebel and SAP," says William G. Dering, Jr., who heads C.E. Unterberg Towbin's ASP research team. "Applicast will enable Agilera to accelerate the build-out and depth of its manufacturing practice, while Applicast should benefit from the sales leverage Agilera's larger reach can provide."

Agilera was founded by CIBER Inc.; Verio Inc., the world's largest web hosting company; and Centennial Ventures, Colorado's largest venture capital firm.

"We believe the ASP industry is evolving to be about more than just hosting a single application. The key to a successful ASP business is a deep level of knowledge and understanding of customers' unique needs through an industry-specific focus," says Paul Rudolph, Agilera chairman and CEO. "Applicast's strong heritage in the manufacturing vertical along with both companies' deep level of business process expertise, `product packaging' and content will create a significant market advantage for the new Agilera."