By Jason Stamper
Rational Software Corp’s December 14 acquisition of embedded software tools player ObjecTime Ltd of Ottawa, Canada turns out to be a bigger deal than was first thought. It seems Rational bought the company not solely for its embedded technology but for its ability to do 100% code generation – functionality which Rational has sorely lacked across its entire product line thus far.
ObjecTime’s embedded software development tool, ObjecTime Developer, has been sold alongside Rational’s Rose product since 1997, and Rational has had a 12% ($9m) stake in the company since that time too. The companies have integrated the products to create Rational Rose Real Time, which Rational says is a Unified Modeling Language (UML) tool for developers building embedded software for mobile and handheld devices.
But another main driver behind ObjecTime’s acquisition by Rational is its ability to do 100% code generation – which until now Rational been without. Competitors in this space such as Sterling Software and Oracle have both had the total code generation functionality for some time. 100% code generation means that developers theoretically do not need to write any code by hand – once they have built the logical model of the application they wish to build, all of the code is generated automatically.
The advantage of this functionality is said to be speed and accuracy improvements in development, as well as the ability to involve users in the development process as they can see changes as soon as they are made to the model. ObjecTime developer can run in two modes – either generating the application at the end of the development and modeling process, or generating the code while it is still being modeled.
Rational is being rather coy about the code generation functionality in ObjecTime Developer, but one of the executives we spoke to close to the deal did accept that it is potentially extremely valuable for other products in Rational’s portfolio: We’re looking at it. We’re not making any announcement about how the technology may be used in other products at this time, and we don’t know yet how hard it would be to use that technology in other tools, he said.
Rational says it is hoping to cross-sell other tools into the Rational Rose RealTime customer base, such as the requirements management product Requisite Pro, the change management tool ClearCase and the defect tracking tool ClearQuest. Asked if the company would be putting together one of its tool bundles aimed at the embedded market, Rational said it was, looking at it. The suites of tools it already offers as a bundle include AnalystStudio; DevelopmentStudio; PerformanceStudio and TestStudio. The company is also believed to be in the process of putting together a project manager’s suite.
Terms of the deal call for Rational to hand over $8.9m in cash and issue 364,000 shares of Rational common stock – worth about $16.2m based on Tuesday’s closing price. In addition, Rational will assume ObjecTime Limited stock options that will convert into 368,000 Rational stock options at an average exercise price of $10.87, for a net $12.4m outlay.
When announced, the total value of the acquisition was $37.5m, but has since risen to about $46m, as Rational’s stock has risen from $44 to almost $52. ObjecTime’s revenues are not known; but Rational did say that it has already made more money from its ObjecTime relationship than the $9m that it sunk into the company in 1997. The deal is expected to close in the March quarter.
This article is extracted from Computerwire’s weekly M&A Impact news and analysis service.
