In a move that is expected to offer small and medium-sized businesses a crack at hot technologies like service oriented architecture (SOA), France’s Sopra Group announced today it will buy Tumbleweed Communications.
The purchase will be made through Axway, a subsidiary of Sopra, which will pay $138 million, or $2.70 a share, for all outstanding Tumbleweed stock.
The deal will give Sopra, a major system integrator in the B2B
It could also kick off a wave of mergers and acquisitions here, as smaller players beef up their capabilities to take on the newly-combined giant.
Tumbleweed provides secure content delivery solutions to more than 3,300 customers in various industries, including health care, financial services and the government. It had revenues of $57 million last year.
Axway, a global provider of collaborative business solutions, reported revenues of $218 million in fiscal 2007. It has more than 8,000 customers, more than 3,000 of which are in the healthcare sector, and earlier this month signed a deal to provide its collaboration software to biotech drug maker Genzyme Corp
Together the companies will have a customer base of more than 11,000 worldwide, and Sopra expects them to generate revenues of about $363 million in 2009, Sopra said.
This is the third major acquisition for Sopra through Axway, which bought U.S.-based B2B player, Cyclone Commerce and the B2B software business of German vendor Atos Origin in 2006.
Comprehensive integration technology
Forrester Research said the Cyclone acquisition would create a company with comprehensive integration technology and a strong global presence, putting Axway head to head with players like BEA Systems
The Atos acquisition made Axway the leading EDI and B2B solution provider in Europe.
The deal will give Tumbleweed’s MFT customers access to technologies only larger companies could pursue, and “they’ll be able now to do things like service oriented architecture (SOA)
“Tumbleweed MFT customers will be very surprised at the plethora of opportunities and technology coming at them from Axway.”
The key point of the deal for Sopra is that, through Axway, it will get access to the SMB market, Kenney said.
“It’s difficult for a very large company with a complex sales model to sell technology at mid-market prices; a mid-market company may not hesitate to spend, say, $15,000 on a solution that gives them secure FTP, but a large company can’t support that sale, it supports $1.5 million deals.”
By purchasing Tumbleweed, Sopra “will make a foray into the SMB market without having to dramatically change their sales model, and they’ll get a sales team and sales channels and opportunities with the brand to support the mid-market as well as reference customers and opportunities to up sell the customers,” Kenney said.
The purchase could also kick off a wave of mergers and acquisitions in the B2B integration market. “With 22 players, the field is somewhat saturated, but it will be dramatically impacted because of that elusive mid-market focus,” Kenney said.
“Tumbleweed is a vendor with one of the biggest faces in the SMB market, and their acquisition could mean a round of further acquisitions among other vendors as some of the smaller B2B players begin looking for technology that will instantly make them players in this market.”
Sopra’s offer was a 53 percent premium over Tumbleweed’s $1.77 closing stock price on Thursday, and Tumbleweed’s prices soared 81 cents, or 46 percent, to $2.58 by closing time today, close to its 52-week high of $2.73 last June.