Ariba Inc, one of the largest suppliers of internet procurement software, said yesterday it will acquire TRADEX Technologies Inc in a $1.86bn stock swap that the vendor says will create the biggest player in the e-commerce business-to-business market.
TRADEX is an on-line trading platform that enables companies to carry out business to business commerce over the web. Mountain View, California-based Ariba said the deal would extend its existing leadership in business to consumer buy-side e-commerce to encompass the burgeoning market for B2B exchanges. Only yesterday, ERP vendor SAP AG announced an on-line trading community for the chemicals and pharmaceuticals industry and Oracle Corp announced a similar deal with Ford Motor in November. Ariba’s main rival, Commerce One, also clinched a massive deal with General Motors to use its software as the basis of its on- line exchange. According to The Gartner Group, the number of B2B exchanges is set to increase to 10,000 by 2002, and Ariba is keen to get a slice of the action.
Ariba said it will issue stock worth approximately $1.86bn, based on yesterday’s closing price of $244 a share, to TRADEX stockholders, which represents approximately 13% of the fully- diluted equity value of Ariba on a pro forma basis. The parties expect the transaction to close in the second quarter of 2000. The deal will be accounted for as a purchase transaction, Ariba said. It added that it expects to take a one-time charge of between $10m and $30m associated with the acquisition.
The acquisition was the second big deal inked by Ariba during the past month. In November, Ariba agreed to buy TradingDynamics Inc for $400m in stock, adding a range of e-commerce products to help create internet exchanges.
