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Ascential Shells Out $106 Million for Mercator

Ascential Software Monday inked an agreement to purchase Mercator Software for $106 million in a merger of enterprise data integration software makers.

The purchase, for which Ascential Software will commence a cash tender offer of $3 a share for Mercator stock, will help Ascential offer a data integration product suite with an emphasis on transactions and analytics.

Enterprise data integration is important because new software is being written on such a frequent basis despite the wealth of disparate legacy products already in use at various businesses. The goal of enterprise data integration is to get these variegated products to mesh without a hitch.

The marriage of Ascential and Mercator, the latest in a rapid-fire succession of acquisitions in the business software space, is expected to yield a company with annual revenues of $250 million to go along with 900 employees and 3,000 customers.

Ascential offers a suite of data profiling, data quality, transformation and metadata management, as well as its real-time integration services that enable on-demand data integration for customers' business processes.

Being able to call up such information is increasingly becoming key in the software space -- so much so that companies like IBM and Veritas are staking their entire businesses on it. With this purchase, Ascential will now be able to beef up its software to deal with data integration requirements regardless of data volumes or latency.

Mercator's offerings are highly regarded by analysts for their ability to complete high performance and real-time integration tasks. Mercator's expertise lies in transaction-oriented data transformation and routing and adaptors for platforms and servers.

Gartner analyst Ted Friedman told internetnews.com the deal had some pros and cons for Ascential. On a positive note, Friedman said Mercator has some strong data orientation and transformation technology that other firms don't have; however, the flipside to that coin is that Mercator's infrastructure has not been faring all that well in the stifled software climate over the last two years or so.

Friedman also said the purchase puts Ascential somewhat awklwardly in the enterprise application suite space, where long-time veterans IBM, webMethods and Tibco compete fiercely. Though Ascential is friendly with IBM, it will now rub competitive elbows against the giant.

Another analyst concurred.

"This acquisition does compete with IBM MQ Series and integration strategy to some level but IBM is probably happy to have one less competitor in the space that Ascential has now absorbed," said Mark Smith, senior vice president of research & CEO, Ventana Research.

"The other interesting piece is that Ascential has to grow somehow and with them resisting BI and Informatica's Access, Analysis and Delivery, this left EAI for them to examine," Smith continued. "The challenge is that they are careful not to position this as EAI, as some could say that Informatica does EAI already with their partnership with WebMethods.

Westborough, Mass.'s Ascential will also expand into vertical markets Wilton, Conn.'s Mercator operates in, including finance, healthcare, retail, manufacturing and distribution.

"Our combined technologies, distribution channels, partnerships, geographic coverage, and skill sets expand the size and scale of our company, and allow customers to apply our comprehensive data integration platform pervasively, throughout their enterprise, to support transactional, operational and analytical application environments, regardless of data volumes or latency," said Peter Gyenes Chairman and CEO, Ascential Software.

Ascential expects the acquisition to be accretive to earnings within its first year of combined operations, as a result of cost synergies, cross-selling opportunities and new revenue streams resulting from the companies' complementary products. The tender offer is expected to close by the end of the third quarter. barring unforeseen circumstances.