RealTime IT News

Mercury Interactive Scoops Up Kintana

Application performance management specialist Mercury Interactive moved to round out its management software offering Tuesday with the acquisition of privately-held IT project management firm Kintana.

Mercury will shell out $225 million in cash and stock for the firm, broken down as $100 million in Mercury stock and the remaining $125 million in cash. Mercury said it will also assume all of Kintana's outstanding unvested options.

The deal brings together Mercury's capabilities in application delivery and management software and Kintana's expertise in IT governance software, which Mercury said will provide a number of benefits to CIOs.

It also signals that the pace of consolidation in the software industry is picking up since late last week when database giant Oracle shook up the marketplace with a $5.1 billion cash bid for enterprise application company PeopleSoft . The offer threw PeopleSoft's own bid for mid-market software company J.D. Edwards into question.

"We are taking this action to extend our leadership position in business technology optimization," said Amnon Landan, chairman, president and CEO of Sunnyvale, Calif.-based Mercury Interactive. "Our industry is at an inflection point. The demand for IT to deliver meaningful business value has never been higher. CIOs are grappling with how to manage costs, risks and performance against a backdrop of increased technology complexity. By adding Kintana's capabilities to ours, for the first time, customers will have software that allows them to run IT as a business, while optimizing the business of IT."

Gartner Research Director Theresa Lanowitz hailed the move, saying, "Business technology optimization is an emerging industry category that optimizes technology and business processes in the enterprise. IT governance and application delivery and management create synergy between two BTO markets. CIOs bridging the gap in these two areas further enables the competitive position of their enterprise."

The move also underscores the rapid growth that both companies have experienced in the past year. Mercury's revenue was $110 million in the first quarter, up by about 22 percent compared to the same time a year ago, according to its financial filings. The company also said the privately-held Kintana reported $44 million in revenue last year, reportedly its fourth consecutive profitable quarter.

Mercury said the executive leadership teams of both companies have put a strategic integration plan in place, and Kintana's 210 employees are expected to transition to Mercury as a new business unit.

Mercury expects the transaction to close in the third quarter, though it remains subject to antitrust clearance and the approval of Kintana's stockholders.