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October 15, 1998


By CBR Staff Writer

Platinum Software Corp is hoping to bring its enterprise resource planning business up to critical mass and has agreed to acquire Dutch ERP software house DataWorks Corp. Platinum is to issue 11.5 million shares, exchanging 0.794 shares for each DataWorks share, valuing the deal at nearly $93m. DataWorks will become a wholly-owned subsidiary of Platinum, with a combined headquarters in Irvine, California. Platinum’s financial software and customer centric ERP, front-office sales, marketing and customer relationship management tools will be combined with DataWorks’ manufacturing applications. Future research and development will concentrate on establishing a modular, component-based architecture for the products. Both firms have been concentrating on Microsoft-based technologies and have been targeting middle-sized companies, with a combined customer base of 10,000. There are currently 2,000 employees, but some reduction is expected, along with building closures, the company said. Although its revenues have contined to rise, DataWorks saw its profit margins drop significantly in the second quarter, and forecast contined pressure over the next two quarters. Dataworks merged with the Interactive Group last year in a $57m stock swap, and followed up this year by buying two smaller firms, C-Way Systems Inc and Cti Software BV. But after setting a $27 high in February this year, the share price has plummeted. Prices dropped further on the news of the merger, ending at close of market at $4.06, from $5.81 on Wednesday. Platinum shares, already very weak (CI No 3,500), lost a quarter of their value, finishing at $5.93 on Thursday night.

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