Software AG To Acquire webMethods, Boost SOA Presence

Software AG plans to acquire webMethods Inc. for $9.15 per share, or approximately $546 million in cash, according to an announcement issued by the two companies today.

The deal promises to increase Software AG's customer base and partner base around the world. On closure and pending regulatory approvals, the deal would double Software AG's customer base in North America, the announcement stated.

Software AG is a Darmstadt, Germany-based provider of open-standards software solutions that facilitate the development of enterprise applications, particularly in service-oriented architecture (SOA) environments. It currently has a customer base of about 4,000 organizations and 100 partners worldwide.

Fairfax, Va.-based webMethods is a provider of business-class integration platforms to more than 1,500 customers worldwide. Its customer base will give Software AG "a major foothold in the critical North American market," according to Karl-Heinz Streibich, Software AG's CEO.

Jason Bloomberg, senior analyst at ZapThink, expected that the deal will have major repercussions for Software AG's competition in the U.S. market.

"This is huge news in the SOA space, because the combination of Software AG and webMethods is now second only to IBM in terms of both traditional integration and SOA capabilities," Bloomberg said. "This is a market-share play and an SOA play entirely. Software AG gets a much stronger North American presence, and they can now leave the likes of TIBCO and Oracle in their dust. Mark my words, Larry Ellison is not going to be happy about this news."

The deal also will add to Software AG's portfolio by enhancing its SOA and business process management (BPM) capabilities. The announcement specified a number of areas where Software AG foresees enhancements, including:

  • SOA governance and enablement;
  • BPM and business activity monitoring;
  • Application integration; and
  • Legacy modernization.

ZapThink's Senior Analyst and Founder, Ron Schmelzer, described some of the benefits of the deal to Software AG in greater detail.

"First, the company further bolsters their SOA infrastructure capabilities by adding greater capabilities in the integration, process and governance areas," Schmelzer explained. "They also inherit the advanced capabilities of Infravio for registry/repository and metadata management that webMethods also saw as high value.

"But most importantly, this acquisition gives Software AG the visibility in front of potential customers and partners that they didn't have on their own. The company is now a major force in the SOA industry and can easily compete against any other market player in the industry. Are we witnessing the emergence of a new mega-global brand?"

The deal is expected to close sometime in the second quarter of this year, according to the announcement.

Note: Contributing author John K. Waters helped with this story.

About the Author

Kurt Mackie is online news editor, Enterprise Group, at 1105 Media Inc.