Interpath Acquires Interliant’s ERP Division

Following through on an April decision to exit certain business lines to focus on core offerings, Interliant Inc. sold its PeopleSoft ERP hosting and related consulting services business to full-service ASP Interpath.

Interpath has assumed ownership of Interliant’s Managed Application Solutions (IMAS) ERP hosting division, based in Columbus, Ohio, and formerly known as reSOURCE PARTNERS. As part of the acquisition, Interpath will take over contractual service of IMAS’ ERP hosting client roster along with their Columbus data center and support facilities.

“The completion of the sale of the IMAS ERP hosting business represents an important milestone in our execution of the narrowed business strategy we announced in April, which includes exiting this line of business,” said Bruce Graham, Interliant’s CEO. “Together with other actions we have implemented in the past several months, we believe the sale allows us to focus resources on our more mature solutions that provide a greater profit potential.”

In its April restructuring announcement, Purchase, N.Y.-based Interliant said it would exit certain business lines to focus on a set of four core offerings, including INIT Managed Messaging (on both the Lotus Domino and Microsoft Exchange platforms), INIT Managed Hosting, INIT Web Hosting (Private Label and Retail), and INIT Security, plus associated professional services.

“We have not only added PeopleSoft’s best-of-breed solutions to Interpath’s application portfolio, we have also acquired a ready-made team for their implementation,” said Joel Schleicher, Interpath’s chairman and CEO. “Though the PeopleSoft ERP business we have acquired was deemed to no longer fit within Interliant’s strategy, Interpath is encouraged that it will quickly be a growth and profit-making element of our overall applications portfolio.”

“Roughly 80 percent of PeopleSoft’s market is made up of companies that report annual revenues of $500 million or more,” Schleicher continued. “At Interpath, we consider that sector of the market to be within our sweet spot. There is no question that this acquisition offers a tremendous growth opportunity.”

This acquisition extends Interpath’s ASP solution portfolio of e-business, e-commerce and CRM business applications and launches the company’s expansion into the ERP market by adding hosted PeopleSoft human resources and financial solutions to its offerings. As part of the transaction, Interpath has agreed to offer employment to substantially all of the employees of the ERP hosting business.

This acquisition also highlights Interpath’s counter-cyclical approach to the market. At a time when other technology providers have been forced to cut back in the face of market turbulence, Interpath, with investments from Bain Capital and Progress Energy, has instead chosen to expand. Interpath’s sales force has doubled in size in just the past four months, and its infrastructure build-out continues.

Today’s announcement comes amid a flurry of similar activity from Interpath. On July 10, the company unveiled a partnership with Deloitte & Touche Outsourcing, and the company promises additional announcements of partnerships and acquisitions in coming weeks.

Interpath is based in Research Triangle Park, N.C., and in August 2000 launched Interpath Australia Ltd. after the acquisition of Alta, one of Australia’s leading ASPs. In June 2000, Interpath announced that Bain Capital, a global private equity firm, gained majority ownership of the corporation, with Progress Energy Inc. maintaining a minority ownership.

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