AspenTech Fights FTC

Cambridge, Mass.-based Aspen Technology has vowed to defend itself from the Federal Trade Commission’s allegation that its $99 million acquisition of Hyprotech violates competition regulations.

“We do not agree with the FTC’s assertions (and) are confident that the acquisition has brought significant benefits to our customers and is not anticompetitive,” said David McQuillin, AspenTech president and CEO.

Lawyers for the Cambridge, Mass., enterprise software company and the government will argue their cases before an administrative judge. A ruling could take between two and seven years, an AspenTech spokesman said. The first date has not yet been set.

AspenTech doesn’t expect its decision to affect research and development, customer support or its overall strategy, however, it is earmarking $6 million to cover the coss of all legal expenses in the case.

The figure will be recorded as a charge against fourth-quarter 2003 earnings, which will be released after market’s close today.

At issue is whether the combined company would dominate the market for applications that help oil companies design plants. By itself, Hyprotech, a Calgary, Canada, subsidiary of AEA Technology, has 600 customers including BP, Conoco, Shell and Exxon-Mobil.

The deal, which closed May 2002, is key to AspenTech’s reorganization around two business lines — engineering software and operations software. AspenTech, which spun out of MIT in the mid-1980s, said the transaction was not required to pass monopoly review before closing.

According to ARC Advisory Group data and company estimates, the market for engineering applications and services for the oil industry is solutions is estimated to be approximately $1 billion annually.

In addition to adding new customers, the deal for Hyprotech will lead to more powerful software that is easier to use than current offerings.

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