MERANT to Acquire NetObjects Division

UK-based ASP MERANT (London Stock Exchange (LSE):MRN; Nasdaq:MRNT)on Tuesday (Jan 9) announced that it has entered a definitive agreement to acquire the Enterprise Division of NetObjects (Nasdaq:NETO), an IBM affiliate, for U.S. $18 million (approximately £12 million).

The transaction is expected to be completede by March 2001. The value of the net assets, subject of the transaction, are $2.2 million U.S. dollars. In the year-ended September 2000, the Enterprise Division generated approximately $10 million U.S. dollars in revenue and the loss attributable to the net assets being acquired amounted to $7.6 million. The approximately 40 employees of the Enterprise Division will become MERANT employees.

As part of this transaction IBM, a substantial owner of NetObjects, will be making a limited equity investment in MERANT on the open market after the transaction closes to demonstrate its commitment to MERANT.

With this strategic acquisition, MERANT will offer a single-provider solution to manage the entire e-business assets of the enterprise. The acquisition enhances MERANT’s fast growing Egility Enterprise Change Management solution by embracing the convergence of applications and web content. The combination expands and further strengthens MERANT’s market position by providing the first true offering of traditional software configuration management with web content management.

“Today, companies are simultaneously doing application development and website development in an effort to distinguish themselves with customers, create operational efficiency and improve their top and bottom lines,” said Gary Greenfield, MERANT president and CEO. “In order to compete in the maturing electronic environment it is essential for companies to blend applications and content throughout the enterprise to form enterprise strength e-commerce sites, extranets and an integrated web-based environment.”

As a result of this acquisition, MERANT will be able to offer an integrated platform for the design, development, management and deployment of both enterprise applications and web content, offering a solution that manages the entire e-business assets of an enterprise including code, content, objects, components, applications and documents, Greenfield said.

“Combining these offerings provides a comprehensive solution, broader and more complete than other solutions in the marketplace,” Greenfield said. “This combination of products and services will accelerate market penetration of both products much faster than either could have done independently. There will be significant cross-selling opportunities for MERANT in both its enterprise change management and e-solutions customer sets.”

“To ensure focus and success of this strategic acquisition, MERANT has no current plans to embark on other acquisitions in the future,” Greenfield added.

Commenting on the announcement, Bill Reedy, Vice President of Business Development for Applications and Integration Middleware, at IBM said, “As traditional applications and web content continue to converge, the need to manage this increasingly complex e-business environment becomes more imperative. We are excited about the integration of MERANT’s enterprise change management solution with the web content capabilities of NetObjects, and the support that this solution will provide for IBM’s WebSphere platform. MERANT has been a long-standing partner with IBM, and we are looking forward to expanding our strategic relationship.”

The NetObjects Enterprise Division includes Collage, Authoring Server and professional services for training and support of these products that are being used by more than 1000 Global 2000 companies. Collage is a truly integrated, real-time content platform for the creation, management and deployment of enterprise web applications such as intranets, extranets and e-commerce. Authoring Server is a pro

duct optimized for building corporate websites.

The Enterprise Division was put up for sale last week to allow NetObjects to narrowly focus on solutions for small business. NetObjects intends to size its operations to be consistent with this focus and is pursuing additional financing for its current plan. The sale of the Enterprise Division will contribute to the funding necessary for that plan. NetObjects also announced last week that John Sculley has resigned from the company’s Board of Directors.

NetObjects also said it will not complete the acquisition of that it announced in October 2000. The company intends to continue its efforts to integrate’s online services with NetObjects Matrix and NetObjects Fusion, and to offer NetObjects Matrix to’s members and partners.

The sale of the Enterprise Division is part of NetObjects’ previously announced evolution from a software vendor to a provider of online solutions for small business with focus on NetObjects Fusion and NetObjects Matrix.

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