[BusinessTeam] Forrester Brief - Peregrine Systems Steals Extricity.htm

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Peregrine Systems Steals Extricity

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<Javascript:authorPop('/ER/Research/AuthorBio/1,1328,397,00.html?docID=119
04')> Simon Yates
March 13, 2001
Peregrine today announced its plans to acquire B2B integration software
vendor Extricity for about $168 million. EAI and EDI vendors must make
deals quickly. Process management expertise will make Vitria Technology
and Attunity the next to go.

by
<Javascript:authorPop('/ER/Research/AuthorBio/1,1328,397,00.html?docID=119
04')> Simon Yates with Joseph L. Butt, Jr.

Consolidation in the integration software field continues unabated as
Peregrine Systems, a provider of infrastructure management solutions,
announced a definitive agreement to acquire B2B integration software
vendor Extricity for about $168 million. For Peregrine, this is a good
deal because it:

*	Builds on its earlier acquisition of Harbinger. In the spring of
2000, Peregrine spent a mind-bending $2.1 billion for Harbinger, to
transform the company from technology asset management solutions to a
provider of EDI and XML integration infrastructure.
<javascript:seeNotePop('/ER/Research/Note/0,1580,11904-1,00.html');> MORE
The acquisition of Extricity adds business process management and provides
Peregrine's 42,000 EDI customers with a migration path from document
exchange to collaborative B2B relationships.

*	Strikes while the iron is hot. Extricity's plans to go public were
scuttled in October 2000 by the collapse of the Nasdaq and a weak IPO
market. With only about $15 million in revenue in the past 12 months and a
big OEM deal with IBM for their B2B product, Extricity's future as an
independent was always in question. The IPO was expected to raise $66
million by selling about 15% of the company.

The acquisition of Extricity leaves the ranks of independent B2B
integration software vendors thin. The remaining B2B integration vendors
and B2B-aware enterprise application integration (EAI) will be hot
properties. Traditional EAI vendors like Actional and Candle don't have
the B2B expertise to draw much of a premium. This means that:

*	Vitria is the next to go. Application vendors like Ariba and
Commerce One must offer shrink-wrapped B2B-centered integration to their
customers. Ariba and Commerce One both need Vitria's expertise in process
management, and the deal between i2 and webMethods makes the vendor a
prime candidate for acquisition. With the firm's stock hovering around the
$4 mark, $134 million in revenues for the past 12 months, and a viable
path to profitability, the software vendor won't be independent for long.

*	BEA Systems will acquire Attunity. BEA is a platform for building
Web applications, but when those Web applications include B2B processes,
BEA's eLink and Collaborate products don't go far enough. With few pure
B2B integration players left, BEA should buy Attunity. Attunity B2B
combines process-centric integration with the ability to build, describe,
and expose business functions via the Internet.

This document is relevant to the following:

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