‘Progress-ing’ in a restructuring

Contact: Ben Kolada

Continuing its yearlong restructuring, Progress Software is selling its Apama complex event processing (CEP) assets to Software AG, effectively unwinding its 2005 acquisition of the startup. Although asset sales have become particularly popular and Progress has certainly been on a corporate diet lately, this move wasn’t widely expected in part because Progress had seemed to indicate that Apama was part of its core business.

In April 2012, Progress announced a restructuring plan that, among other moves, would refocus on its core OpenEdge, DataDirect and Apama products. However, the company has since had a change of heart regarding Apama. In announcing the divestiture, Progress said Apama’s target market of Wall Street and big telcos, as well as its deployment and sales model, differ significantly from Progress’ application development platform, which targets the midmarket. (We note that Progress is retaining Apama’s core decision analytics capability.)

The deal follows Progress’ sale of 10 product lines during the two previous quarters. Terms weren’t disclosed. (For the record, Progress paid $25m for Apama in April 2005.) According to our understanding, Software AG is paying less for Apama – both on an absolute and relative basis – than TIBCO paid in a directly comparable CEP deal earlier this week, when it reached for StreamBase Systems. We’ll have a longer report on this acquisition in an upcoming Daily 451.

For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

Software AG does a bit of MDM shopping of its own

Contact: Brenon Daly, Dennis Callaghan, Krishna Roy

A little more than a year after scrapping its OEM agreement with master data management (MDM) vendor Orchestra Networks, Software AG has picked up its own MDM and data-governance technology. The German company recently reached across the Atlantic for Data Foundations, which we gather was a small purchase of a startup generating less than $10m in sales. Nevertheless, the deal continues the recent consolidation in the MDM market, which has seen fellow big-name buyers such as IBM, Informatica and TIBCO Software make acquisitions here.

A bit of a wonky area of information management, MDM has increasingly become a complementary tool for application integration and business process management software as it helps to make sense of the many different data types that underpin these applications. Further, other rival players have taken a platform-based approach to MDM, combining data-integration and data-quality capabilities into the MDM mix.

We wonder if Software AG will follow suit and enter the MDM platform fray by pairing the Data Foundations buy with another MDM-related purchase. If it looks to do that, we wouldn’t at all be surprised to see Software AG add a data-quality provider to its portfolio. A few names that might be worth a look for the acquisitive German company are Datanomic, DataLever, DataMentors, Datactics, Clavis Technology and Human Inference.

Software AG looks for a repeat

Contact: Brenon Daly, Dennis Callaghan

Having significantly whittled down the debt it picked up acquiring webMethods two years ago, Software AG is now ready to add on a bit more to cover its pending purchase of IDS Scheer. It plans to borrow some $470m and pay that back over the next three years or so. With Software AG’s steady cash generation, that shouldn’t be a problem. (The German company, which also pays a dividend, says it is on track to accumulate some $190m in free cash flow this year.)

In fact, we understand that capital questions hardly figured into the firm’s M&A plans, which it had trumpeted for the better part of two years. Instead, Software AG has simply been waiting for prices to come down. And based on the fact that it paid less than half the valuation for IDS Scheer than it handed over for webMethods, we’d say its patience paid off. (Additionally, it is about half the valuation that IBM paid for ILOG, which boosted Big Blue’s business process management portfolio.)

As a final thought on this week’s transaction, we suspect that if Software AG gets half the return on IDS Scheer that it got on webMethods, it’ll probably be pretty pleased with its new purchase. (Arma Partners advised Software AG on both deals.) WebMethods is now the vendor’s second-largest revenue producer. Moreover, the webMethods business expanded 33% in 2008 – twice the rate of overall revenue growth at Software AG last year.