CRM Software Developer Chordiant Acquired by Pegasystems
The business process management software firm makes a splash in the customer relationship management space with $161.5 million purchase of Chordiant.
Business process management (BPM) software developer Pegasystems made a strategic move to broaden its product offerings with the proposed acquisition of Chordiant Software, a developer of customer relationship management (CRM) applications, for $161.5 million, company officials said.
Pegasystems (NASDAQ: PEGA) will pay $5 a share for all outstanding Chordiant (NASDAQ: CHRD) shares, a 31 percent premium above Chordiant's closing price on Friday that sent Cupertino, Calif.-based Chordiant shares skyrocketing up $1.17 a share to $4.98 in Monday afternoon trading.
Shares of Cambridge, Mass.-based Pegasystems rallied up $2.47 a share, or 7 percent, to $39.30.
"This combination creates a broader portfolio which will offer an expanded client base new capabilities to meet next-generation CRM needs," Pegasystems CEO Alan Trefler said in a statement. "We are excited to add Chordiant's technology and domain expertise to bolster our previously announced investment plans in BPM and CRM."
The acquisition is just the latest in a series of deals that has further consolidated the enterprise software space.
In December, IBM acquired privately-held BPM developer Lombardi and in January, Progress Software snapped up Savvion, another well-established, privately-held BPM vendor for $49 million.
BPM software choreographs multiple business processes and enables different applications and technologies employed in a distributed computer network to work together.
It's clearly a hot market. According to IDC, worldwide BPM software sales will grow at a compound annual growth rate of nearly 15 percent a year for the next four yearspushing the total market from roughly $1.7 billion in sales this year to more than $3 billion by 2013.
A Gartner report released last summer found that 55 percent of companies expect to increase their BPM spending by at least 5 percent in the next year.
A flock of upstart and recently acquired subscription- and cloud-based BPM providers has provided an affordable option for small and midsized businesses that have historically passed on expensive, on-premise BPM implementations undertaken by large enterprise companies.
Pegasystems said the purchase will likely be dilutive to its earnings in 2010 but will add as much as $0.03 a share in profits, on an adjusted basis, in 2010 and as much as $0.20 a share in 2011.
Chordiant, which counts the likes of Time Warner Cable, T-Mobile and the Royal Bank of Scotland among its customers, reported sales of more than $76 million last year.
The merger is expected to close in the second quarter of this year.