My Yahoo!Ariba Buys Agile In $2.6 Billion Deal
SILICON VALLEY - Their company names both start with "A" and they're both meant to suggest speed, but Ariba and Agile are quite different.
That's a good thing for Ariba (nasdaq: ARBA - news - people ), which has recently fallen out of favor with analysts who question its long-term growth prospects. But nobody can find fault with Ariba's news today that it is paying about $2.6 billion in stock for Agile (nasdaq: AGIL - news - people ), another business-to-business firm.
Ariba is in the online procurement market--it helps companies buy finished goods over the Internet. Agile, on the other hand, helps customers with the more unpredictable business of ordering parts online and making dozens of tweaks to their specifications. The markets are complementary, but integrating the two sets of products is a doozy of a task. By entering supply-chain management, Ariba will go up against competitors including Oracle (nasdaq: ORCL - news - people ) and i2 Technologies (nasdaq: ITWO - news - people ).
"This is a pretty big shift from what they've been doing," says David Mahoney, an analyst with Wit SoundView in Stamford, Conn. "But it's a great move for them since Agile's market is more attractive right now than the procurement market."
The companies expect the deal to be complete by April or May 2001. Ariba's shares fell 4.1% to $38.38 on the news, while Agile's shares rose 17.7% to $50.38. For the first quarter of its fiscal 2001, Ariba's net income was 5 cents per share, or $14 million, on $170 million in revenue. Agile had a net loss of 1 cent per share, or $642,000, on revenue of $20.2 million during its second quarter ended Oct. 31.
San Jose, Calif.-based Agile is "one of the more interesting properties on the monopoly board," says Eric Upin, an analyst with Robertson Stephens in San Francisco. "Companies are moving away from custom-designed parts to standardized parts, which opens up this market."
Ariba says it can now offer customers "a new class of interactive value chain solutions," but it's unclear just how it will integrate Agile's product lineup into its own. For one thing, the two products are geared toward two different sets of customers within organizations (the manager who buys the pencils and the chairs and the one who orders chips for the company's end products).
The acquisition makes Ariba's joint marketing deals with IBM (nyse: IBM - news - people ) and i2, a leader in supply-chain management, shaky at best. Dallas-based i2 can probably say hasta la vista to Ariba.
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