Breaking News: Ariba to buy Procuri for $93 million
By Staff -- Purchasing, 9/20/2007 2:25:00 PM
In a surprise move, spend management software provider Ariba today announced an agreement to acquire privately held competitor Procuri for $93 million.
The deal combines two of the biggest procurement software providers in the market, in terms of number of customers as well as breadth of product offerings. Ariba will play off $8 million of Procuri’s debt as part of the deal and put $14 million of the cash in escrow to secure indemnity obligations of Procuri stockholders.The deal is expected to close by the end of the year.
In a press release, Bob Calderoni, CEO of Ariba, said “This acquisition will accelerate our growth, give us scale in our on-demand business and strengthen our position in the fast growing mid-market.”
Ariba has a track record of growth through major acquisitions stemming back to its 2004 buy of Freemarkets, the largest provider of online reverse auction tools at the time. For its part, Procuri has made its share of acquisitions including TrueSource in 2006.
Founded in 1999, Procuri made its name as an early entrant into the on-demand software market, also known as software as a service (Saas). Ariba was a relative latecomer to the on-demand market, launching its on-demand offerings in late 2005.
In a 2006 Purchasing story, Cheryl Hobgood, strategic sourcing manager at Cox Enterprises in Atlanta, said the company was up and running on Procuri’s on-demand tool in under three months.
Procuri’s focus on the midmarket also made it an attractive buy for Ariba. In a 2005 Purchasing story, Procuri customer Bill Schrouder, procurement specialist for LeChase Construction Services in Rochester, N.Y., said the low cost of entry for on-demand software from Procuri made it a good choice for the midmarket.
In a research brief today, AMR Research’s Mickey North Rizza said the acquisition is “a prime opportunity for Ariba to grab the midmarket share it has diligently been pursuing for the past year. With more than 60% of Procuri’s customer base under $2 billion and an impressive European customer base, this is a solid acquisition for Ariba, which has been struggling to increase mid-market sales.”
She also said Procuri’s strong European presence will augment Ariba’s domestic and international base of 550 software technology customers.
Note: This news is evolving throughout the week. Check back to Purchasing.com for updates as they become available.
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