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iManage Weaving Into Interwoven

Content management software maker Interwoven Wednesday said it will merge with iManage in a stock and cash transaction deal estimated at $171 million.

The proposed merger is expected to resolve itself in the fourth quarter of this year pending government scrutiny and shareholder approval. The new company would support more than 2500 joint customers.

If the deal does pan out, the combined company will keep the Interwoven name and will be headquartered in Sunnyvale, California. Company execs say their partnership and reseller agreement announced in February 2003 was a key catalyst in bringing the two firms together.

"With the success of our existing partnership, we have already seen how our teams and products are aligned, and it is a natural progression to unite," iManage president and Mahmood Panjwani. "This union with Interwoven will help us deliver the most comprehensive, integrated next-generation ECM solution available, to prospects and customers."

The deal also sends a strong message to joint rival Documentum , which also makes content management software.

The market opportunity for Web content management is enormous and is expected to reach $2.8 billion by 2008, according to a recent Jupiter Research report.

The study found over-complicated, end-to-end packages can as much as quintuple Web site operational costs over human alternatives. In fact, 61 percent of companies Jupiter surveyed who have already installed Web content management software still rely on manual processes to update their sites.

"Business executives often mistakenly view content management as the silver bullet that will free them from IT constraints," said Jupiter Research Analyst Matthew Berk. "All too often, content management solutions don't live up to that expectation, creating frustrated business executives and IT staff who somehow have to squeeze return out of this hefty investment. The days of high-end, bloated and overly complex Web content management infrastructure software are numbered. Organizations will increasingly look to Web content management as a smaller, well-defined component in their integrated solutions.

So far, the two companies say their integration plan is to match iManage's collaborative technology with Interwoven MetaTagger content intelligence server software, to improve the ability to personalize and find relevant content, and link iManage's expandable content repository with Interwoven OpenDeploy content distribution software, to distribute collaboratively developed documents and corporate knowledge.

Because of their previous relationship, iManage says its product line is already available from Interwoven Conversely, Interwoven client services and technical support teams are already trained to support the iManage product line.

Company execs say the Interwoven 6 Platform will also serve as its marquee delilvery platform. Interwoven also brings to the table a Services-Oriented Architecture for J2EE and .Net along with more than 1250 worldwide installations. For its part, iManage said it offers market share leadership among major law firms. Based on 100 percent Java and J2EE-compliant architecture, iManage also works with Microsoft Outlook and Office.

Financially, iManage shareholders will receive $1.20 per share in cash and 2.0943 shares of Interwoven stock for each share of iManage stock that they hold. Interwoven shareholders are expected to own approximately two-thirds of the company's publicly traded shares.