WebMethods Puchase Could Challenge IBM

By Clint Boulton

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Software AG today agreed to buy rival webMethods (Quote) for $546 million in cash. The deal helps forge a one billion euro software giant that will challenge IBM in the growing market for service-oriented architecture (SOA) products.

Software AG makes all kinds of infrastructure software that supports SOA (define) distributed computing models; but the Crossvision SOA suite is the German company's major platform for supporting business processes.

WebMethods offers several similar products, including its flagship SOA suite, Fabric 7, which helps IT administrators integrate disparate applications and manage and monitor business processes.

Fabric 7, developed with software from webMethods' purchase of Infravio last year, will be combined with Crossvision to expand the total SOA portfolio for Software AG.

Executives for both companies stressed that the deal will help Software AG double its customer base in a North American market dominated by vendors such as IBM (Quote) and HP (Quote).

"The acquisition adds more than 1,000 customers worldwide," said Software SG CEO Karl-Heinz Streibich during a conference call today. "This is a significant potential for Crossvision cross-selling as well as the 3,000 customers of Software AG is a huge opportunity for the portfolio of webMethods."

Together, Software AG and webMethods will count more than 4,000 customers in financial services, manufacturing and the public sector.

Streibich said the merger, expected to close in the second quarter this year, will help Software AG realize its goal of becoming a one billion euro company by 2011.

David Mitchell, webMethods' president and CEO, said the agreement followed substantial strategic interest in the company, "and in the end we determined the transaction with Software AG was the most compelling one for the company and stockholders."

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