Siebel Sees 'Tech Refresh' in Banking

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Betting on a "technology refresh" in the banking sector, business applications provider Siebel Systems on Tuesday said it has bought Eontec for $70 million cash.

Another $60 million could be added to the purchase price if Eontec hits revenue, product development and customers satisfaction milestones over the next 12 months.

Eontec was founded in 1994 as a banking technology services company. In 1998, the Dublin firm developed a J2EE-based suite that includes software for branch offices, e-banking, call centers and multi-channel lending departments.

"We have an existing partnership with Eontec and have been out in the market showing an integration of the products and how they work together," David Schmaier, a Siebel executive vice president, said during a conference call with analysts.

Siebel said the applications dovetail with business intelligence and customer relationship management offerings sold through its retail finance division. Siebel believes the combined products give it a more complete offering than competitors in the space, such as Fidelity, S1 and Argo Data Systems.

Siebel said the timing is right for the acqusition. From 2001 to 2005 the compound annual growth rate for IT investments at bank branches is estimated at 10 percent, according to the research firm the Tower Group.

There is also a move toward multi-channel banking, which requires applications that can track and present up-to-date customer information, whether it comes through a Web site, call center, branch or ATM.

Eontec only has nine customers (including Bank of Ireland and CIBC) and most of them are in Europe. But Siebel is convinced that banks moves slowly and are due to refresh their IT infrastructure and applications.

Siebel said its direct sales force, as well as its partnership with IBM, will bring Eontec's technology to customers in the United States.

Eontec CEO Patrick Brazel will lead Siebel Systems' retail finance division. All Eontec employees will be asked to join Siebel.

The acquisition is expected to reduce Siebel's second-quarter earnings by up to a penny per share. The San Mateo, Calif., company will pay a one-time charge of $3 million to $7 million associated with the purchase.

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