Mergers and acquisitions in September

25 February 2006

At $5.85 billion, Oracles long-expected acquisition of Siebel might have been the biggest deal of the month, but eBay and Microsofts Internet telephony buys made the most noise in the technology industry in September.

Ecommerce giant eBay paid $2.6 billion for Luxembourg-based Skype, promising a further $1.5 billion if performance targets are met. Skype was founded two years ago by the team behind KaZaA, which provided peer-to-peer filesharing software. Skype uses similar technology to enable free voice-over-Internet Protocol (VoIP) calls between users, charging for extra services like voicemail and landline calling.

Even though only 2 million of its 54 million users pay for such services and the company is yet to turn a profit, Skype had sparked interest from Yahoo!, Google and News Corp. This may account for the steep price eBay paid, but many analysts have questioned that valuation: "eBay could have developed its own sophisticated messaging and communications platform, or even bought one, for far less money than it is paying for Skype," says Ovum analyst Mark Main.

Microsoft also bought into the VoIP world, purchasing Teleo, a provider of VoIP software and services, at the end of August for an undisclosed fee. It will embed Teleo's technology into consumer applications such as MSN Messenger.

Relative to the Skype deal, Hewlett-Packard (HP) picked up a bargain with its $425 million purchase of Peregrine, an asset management software company that recorded $191.1 million in revenues in 2004. Peregrine has slowly engineered its way back to health and respectablity after an accounting scandal forced it to file for bankruptcy protection in 2003. The buy will help HP stand up to asset management giants CA and IBM. However, analyst group Gartner warns customers that product overlap means HP is unlikely to maintain both its existing asset management offering and the acquired one.

HP also purchased privately held AppIQ for $270 million. Although the four-year-old storage resource management vendor has never reported profitability, AppIQ will bolster HP's presence in the storage software market and may provide valuable OEM deals with Engenio and SGI.

Acquirer	Activity	HQ	Target	Activity	HQ	Price
Mergers and acquisitions in September
2e2 Group	IT managed services	UK	TriSys	Back-up s/w &services	UK	£8.11m
2e2 Group	IT services	UK	Yul Data Security	Data mgmt/security s/w &svcs	Holland	n/a
Access Co	Mobile content s/w &svcs	Japan	PalmSource	Mobile operating systems	US	$324.5m
Avaya	Communications equipment	US	Nimcat Networks	IP phone call processing s/w	Canada	C$46m
CheckFree	Financial ecommerce s/w &svcs	US	Integrated Decision Systems	Financial portfolio mgmt s/w	US	$18m
Chelford Group	Supply chain s/w &svcs	UK	Agility Systems	Supply chain execution s/w	UK	£3.8m
eBay	Online auctions	US	Skype Technologies	Internet telephony s/w &svcs	Lux	$2.6bn
Epsilon Data Management	Financial services s/w	US	Bigfoot Interactive	Email marketing s/w	US	$120m
Exact Software	Business applications s/w	Holland	Modulair Easy Access	Warehouse management s/w	Holland	n/a
F5 Networks	Internet traffic controllers	US	Swan Labs	Network appln acceleration prods	US	$43m
FileNet	Content mgmt s/w	US	Yaletown Technology Group	Content compliance s/w	US	$11m
Hewlett-Packard	Systems, s/w &IT svcs	US	AppIQ	Storage resource mgmt s/w	US	$270m
Hewlett-Packard	Systems, s/w &IT svcs	US	Peregrine Systems	Asset &service mgmt s/w	US	$425m
IDT	Telecoms services	US	Net2Phone	Voice-over-IP phones	US	n/a
Logicalis Group	Systems integration svcs	UK	Hawke Systems	Storage/systems integration svcs	UK	n/a
Mercury Interactive	Appln optimisation s/w	US	BeatBox Technologies	Web user tracking s/w	US	$14m
Mercury Interactive	Appln optimisation s/w	US	Intuwave's m-Test unit	Wireless testing tech	UK	n/a
Microsoft	Applications &systems s/w	US	Alacris	Identity assurance s/w	Canada	n/a
Microsoft	Applications &systems s/w	US	Teleo	Voice-over-IP s/w	US	n/a
Oracle	Database &applns s/w	US	Siebel Systems	CRM s/w	US	$5.85bn
Oracle	Database &applns s/w	US	G-Log	Logistics/transport mgmt s/w	US	n/a
Polycom	Voice &video conferencing s/w	US	DSTMedia Technology Co	IP conferencing products	China	n/a
SAP	Business applications s/w	Germany	Triversity	Customer-centric retail s/w	Canada	n/a
SimCorp	Financial management s/w	Denmark	SolutionForge	Finance info exchange s/w	UK	n/a
SumTotal Systems	Business perf mgmt s/w	US	Pathlore Software	Learning mgmt s/w	US	$47m
Symantec	Security and storage s/w	US	WholeSecurity	Behaviour-based security s/w	US	n/a
Tikit Group	Law firm IT services &s/w	UK	Shamrock Marketing	Data mgmt for prof svcs	UK	£0.7m
Verint Systems	Analytics s/w	US	Opus Group	Performance analysis s/w	US	$12m

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