SSA Global, a Chicago-based ERP vendor, unveiled plans yesterday to acquire Epiphany for roughly $329 million.
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The announcement does not bode well for existing Epiphany customers, particularly in marketing, Epiphany's strongest applications, according to Elana Anderson, senior analyst with Cambridge, Mass.-based Forrester Research Inc.
"If you look at SSA and the verticals they target, they do not align with Epiphany's clients," Anderson said. "In the last couple of years, Epiphany has targeted financial institutions, insurance and telecom. Those verticals aren't even on the SSA radar screen."
Under the agreement, SSA Global Technologies Inc. will purchase San Mateo, Calif.-based Epiphany for $329 million, or $4.20 per share for shareholders of Epiphany. The acquisition is subject to the customary regulatory approval and is expected to close in eight to 12 weeks, according to SSA.
Initially, it appears that SSA will use Epiphany's CRM suite to cross-sell into its existing ERP customer base, Anderson said. That will likely mean less focus on developing Epiphany's product.
"Moreover, they're a midmarket vendor," Anderson said. "While I never advise anyone to run out and buy a new solution, in the long term I don't think this is good news for Epiphany's customers."
The two companies' products are both based in a similar services-oriented architecture and built using Java 2 Platform, Enterprise Edition technology, which should facilitate integration with existing enterprise applications, according to SSA.
"CRM is an important growth market and Epiphany has innovative solutions that are highly respected for their robust functionality, technology, infrastructure and ease of use," Mike Greenough, chairman, president and CEO of SSA Global, said in a statement. "SSA Global brings worldwide distribution power to Epiphany solutions, as they will become part of a total end-to-end solution."
The deal was announced in conjunction with Epiphany's quarterly earnings. The company announced a net loss of five cents a share for the quarter just ended, compared to an 11 cents per share loss one year earlier.