Acquisition activity is once again kicking up in the CRM space with two deals that will change the face of midmarket...
vendor Pivotal Corp.
Today the Vancouver, British Columbia, company announced it would be acquired by Oak Investment Partners, a private equity firm, in a $48 million cash deal. In an added twist, Pivotal also said it would merge with Kirkland, Wash.-based Talisma Corp., a customer service software firm.
Terms of the merger were not released.
Pivotal CEO Bo Manning said the Oak Investment acquisition will give Pivotal secure financial backing without being "a slave to quarterly financials." Once the deal is complete, Pivotal will no longer be publicly traded.
He added that merging with Talisma will add new e-service capabilities, as well as double Pivotal's research and technical support staff. Together, the companies will have more than 700 employees.
Talisma competes with companies like eGain Communications Corp., Kana Inc. and RightNow Technologies Inc., offering e-mail management, prospect management, marketing campaign management and B2B chat capabilities.
Initially, the companies will continue to execute on their current product road maps, but they plan to eventually combine their offerings, executives said.
"We're going to take everything that makes sense from the two companies and move them into a single code base, most likely Pivotal's," said Talisma CEO Dan Vetras.
Together, Pivotal and Talisma have roughly 2,000 customers; they sell to few of the same companies.
"There are big cross-sell opportunities here," Manning said.
Kelly Ferguson, an analyst with Current Analysis in Sterling, Va., said the deal "makes perfect sense." It allows Pivotal to scale up in the competitive CRM midmarket and gives customers added service functionality, she said.
"Since Talisma has a Web-based architecture, I don't imagine the move to a Pivotal code base should be much of a concern to customers," Ferguson said.
Investors in the publicly held Pivotal will receive $1.78 per share, though they may get an extra 3 cents per share, depending on the company's financial performance through Oct. 16. Twenty-seven million shares are outstanding.
Pivotal shares opened Wednesday at $1.82.
Pivotal's board has signed off on both deals. They are still subject to regulatory approval but are expected to close by December.
Oak Investment Partners is a big investor in Talisma and was an original investor in Pivotal, executives said.
Talisma was founded in India, and 80% of its employees are located there. Pivotal has 70 staffers in India. Operations there will play a large role in driving down costs, executives said.
Manning will stay on as president and CEO of Pivotal; Vetras will assume the role of chief operating officer.
Today's developments are the latest in a string of mergers and acquisitions hitting the enterprise applications space. In addition to Oracle Corp.'s lingering takeover bid for PeopleSoft Inc., this summer PeopleSoft completed its acquisition of J.D. Edwards & Co. Other recent acquisitions include Business Objects buying Crystal Decisions Inc. and Hyperion Solutions Corp. taking over Brio Software Inc.
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