The share and cash deal, which should be completed by April 2002, extends the breadth of TIBCO’s integration messaging solutions. While $115 million might be seen as a high price for a vendor with annual revenues of only $15 million, if TIBCO can upsell its products to Talerian’s impressive customer base the deal will be well worthwhile.
Integration vendor TIBCO plans to buy complex messaging provider Talarian for $115 million.
Integration vendor TIBCO has announced its plans to buy complex messaging provider Talarian for $115 million in stock and cash, in a deal aimed at bolstering its flagship integration platform and customer base. The deal follows TIBCO’s first operating profit, recorded last year..
Talarian provides TIBCO with its adaptive multicast technology, which acts as a software ‘switch’ by selecting the right data delivery mechanism for current application needs and network capabilities, in real time. Although the two companies’ messaging solutions do compete to a certain extent, their capabilities are complementary. Integrating the systems will allow TIBCO to expand its range into a variety of areas, such as web services, distributed application capability and mobile EAI.
Aside from the technology, Talarian’s key asset is its impressive customer base. Its products are used by some of the world’s biggest corporations and organizations, including the American Stock Exchange, New York Stock Exchange, Boeing, Cisco, Southwest Airlines, VISA, Lockheed Martin, Raytheon, Nortel Networks, MicroMuse and MCI.
Considering current economic conditions, Talarian’s debt, and its annual revenues of just $15 million, the price looks a little high: TIBCO will pay $5.30 per share, half in stock and half in cash, for each of Talarian’s outstanding shares. Unsurprisingly, the announcement has driven Talarian’s price per share up by over $2, or 64% in recent trading.
However, the impressive customer base may justify the price tag, as long as TIBCO can successfully upsell its enterprise class integrations solutions to Talarian’s customers. It will be impossible to see the true value of the purchase until long after the acquisition is completed in April.
In short, the move is a sensible but expensive expansion for TIBCO. It fits well with the company’s current strategy of expanding the depth of its solution offering and targeting all of the major companies in each vertical industry.