RealTime IT News

Veritas to Buy Two Firms for $599M

Veritas Software on Thursday moved to acquire Precise Software Solutions and Jareva Technologies for $537 million in stock and $62 million in cash, respectively.

Mountain View, Calif.'s Veritas made the aggressive bids to shore up its storage and performance management offerings by offering new products that will provide more value for IT managers looking to cut costs. On another level, the action demonstrates the company's augmentation from storage management software provider to a maker of storage systems with application performance and availability management products. IDC estimates this market will be worth $11 billion by 2006.

The purchases are part of a continuing trend in the software industry, which has seen large firms looking to fill holes or broaden their portfolios snap up smaller firms with exit strategies.

Of the Precise play, Martin Ward, Director of Product Marketing for Veritas, said his firm purchased a leading creator of application performance management software to help IT managers run important applications from the likes of SAP, Oracle and Microsoft with the best performance possible and minimal failure. Precise monitors all parts of the application infrastructure, including Web servers, application servers, databases and storage, to let customers identify and correct problems before they impinge on applications. Competitors in this space include BMC, Quest Software, Computer Associates and Compuware.

In privately-held Sunnyvale, Calif.'s Jareva, Ward told internetnews.com Veritas has aimed to add server automation software. Jareva's products allow businesses to lower their IT costs by making more efficient use of server hardware and reducing the need for IT staff to perform administrative tasks. Rather than manually setting up servers for specific operating systems and business applications, Jareva's server provisioning technology lets companies automatically deploy additional servers without human intervention.

Also with Jareva's server provisioning software, servers can be moved between applications depending on workload. For example, a server could run SAP on Windows 2000 one day, and then run Oracle on Linux the next. Sharing servers allows CIO's to drive more value out of their hardware investment, Ward said. Competitors in this space include BladeLogic, PlateSpin and and IBM's Tivoli line offer this software as well.

Gartner Group Analyst Ray Paquet told internetnews.com Veritas has broadened its platform with the purchases, which he said are major strikes to the competition.

"[The acquisitions] are very important," Paquet said. "When customers look at delivering quality IT services, they look for good response time at a reasonable price. Precise tells you what is needed and Jareva adds and removes computing resources to the equation."

Nancy Marrone, senior analyst with Enterprise Storage Group, said the deals will cause many players across the storage sector to sit up and take notice. Giant EMC is one of these, she said, because it also offers automated provisioning software. Now that Veritas has it at the application level and may eventually be able to provide a grid computing envrionment, this may cause rivals to go out and acquire other automated server provisioning firms.

"If Veritas combines these tools with its SANpoint control storage provision, this could help IT managers understand if a performance impediment is due to the server, or in the way the storage is set up," Marrone told internetnews.com. "When you tie it all together with the application performance you have a strong story. These are solid acquisitions for Veritas and the company has a great long-term story on establishing a complete framework."

Despite the positive potential of the 1-2-3 punch, Marrone cautioned that tieing these pieces together is no walk in the park. "There will be significant integration challenges."

Veritas will add about 500 total employees when the deals are done, with some 470 coming from Precise and 35 moving from Jareva. The Precise acquisition is valued at $16.50 per share of Precise stock, for a fully-diluted consideration of approximately $537 million. Taking into account Precise's current cash position, the enterprise value is approximately $400 million. Precise shareholders will receive $16.50 in cash, and if they elect, their consideration in up to 25 percent Veritas stock, with the remainder being paid in cash. Based on a fixed exchange ratio of 0.2365, a maximum of approximately 7.5 million shares could be issued to the shareholders of Precise.

The Precise transaction is expected to close in Q2, subject to shareholder approval and regulatory approvals.