Progress on Mainframe Integration

By Clint Boulton | December 20, 2005
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Application integrator Progress Software has agreed to buy Neon Systems for $68 million to make mainframe integration a part of its DataDirect unit.

DataDirect makes software drivers for databases and operating systems to connect disparate types of data, which is a crucial task in distributed computing models, such as service-oriented architectures (SOA).

But one area where it was lacking was in software for mainframe integration.

Enter Neon, maker of software to access data and applications stored on mainframes, where many large financial service providers and telecommunications carriers run their transactions applications. S

Neon's Shadow software brand enables Web services integration with mainframes in SOAs, along with real-time event processing. This is critical at a time when many large and small enterprises are toiling away at integrating different applications.

Neon's assets will also let Progress's Sonic Software and Real Time operating units make the mainframe a participant in SOA deployments.

Together, DataDirect and Neon can offer customers a slew of data-access products and technologies for mainframe data sources, such as DB2, IMS/DB VSAM, Adabas, CICS/TS, IMS/TM, CA-IDMS and Natural, as well as databases such as Oracle, DB2, SQL Server, Sybase, Informix, and Progress OpenEdge.

Neon products support SQL access through drivers such as ODBC and JDBC.

"Our customers and prospects have long asked for a single enterprise-wide data connectivity vendor that can cover all platforms, including the mainframe," said Rick Reidy, president of DataDirect. "This acquisition lets us meet all of our customers' data-access requirements."

Noble Acquisition Corp., a wholly owned Progress subsidiary, will offer $6.20 per share in cash for all shares of Neon stock in the deal, which is expected to begin on or before Dec. 30. This represents a premium of roughly 46 percent, based on the average share price of Neon on the Nasdaq for the last month.

Neon will become part of DataDirect after the tender offer is consummated in the first calendar quarter of 2006.

Progress Software also reported net income for the fourth quarter of $14 million, or 33 cents a share. That's up from $10.9 million, or 28 cents a share, from the same quarter a year ago. Revenue rose 12 percent to $108 million.

Analysts had forecast earnings of 37 cents a share and revenue of $105.8 million.