RealTime IT News

Serena Makes $380M Software Tools Play

In a bid to add complementary tools for all major operating systems, Serena Software agreed Wednesday to acquire fellow software tools maker Merant for $380 million in cash and stock.

Selling their wares in a market dubbed enterprise change management (ECM), Serena and Merant make software tools that allow developers to manage changes in software applications, code and Web content along every step of their creation, including the visualization, modeling and testing stages.

Serena's vision is to create as complete a software suite as possible as part of an increasingly popular approach to development known as application lifecycle management (ALM), which is also employed by tools giants IBM Rational and Borland.

The purchase, should it succeed, would certainly make Serena a formidable competitor in the tools market alongside IBM and Borland and would heat up the companies' race to win customers over to their ALM strategies.

Serena CFO Robert Pender said on a conference call said the deal is complementary. Serena, of San Mateo, Calif., makes change management software for mainframe operating systems, while Hillsboro, Ore.'s Merant crafts the same type of products for distributed operating systems, such as Unix and Linux. The combined customer base would be 18,600.

Serena President and CEO Mark Woodward said the purchase would allow Serena to cross sell products and expand into new territories.

Thomas Murphy, senior program director of Research Services, said that given the product overlap and the struggle Merant had in its failed merger with MicroFocus the deal could be a "tough go" from Merant's side.

"If I was a product guy there I would be thinking about finding a new place to work," Murphy told internetnews.com. However, he also pointed out that Serena hasn't offered a roadmap for where they are trying to go and what they want to accomplish with regard to product support.

As for challenging other tools players, Murphy said the purchase gives them a bigger marketshare than before but they still won't have nearly the breadth of tools that IBM, Borland and Microsoft possess.

The purchase, which does not yet have a closing date, would also pare Serena's costs for duplicative exchange listing, public company compliance obligations and administrative infrastructures.

Merant President and CEO Gerald Perkel will join Serena's board as a director, while the company's 535 employees will also join the combined concern.