Additional Thoughts on Ariba's Procuri Acquisition
In general, what I gathered from the call is that Ariba is keen to spin the deal as a thrust into the middle market. I heard from Tim Minahan after the deal announcement that Procuri has customers ranging from $10-$12 million in revenue into the Fortune 10. While this is certainly true, I'm not sure if I buy that the middle market focus of Procuri was the driving force in the deal. To be honest, this really feels more like a financial play to me than Ariba acquiring a solution or a sales organization with a particular focus on just reaching down market like a Sage in the ERP space. In reality, Procuri had customers of nearly all shapes and sizes. Companies bought their solutions over the years primarily due to their ease of use and reasonable price points -- and this mattered for both small and large organizations.
Regarding the financial metrics of the deal that I learned on the call, Ariba "expects to see this transaction become accretive in 3 quarters" of what I presume is closing. They also noted that "we should be at a run rate of synergies that should generate an incremental 10 cents per share annually" which will allow them to accelerate subscription revenue growth to 70% (up from 40%). And by 2009, "60% of revenue will come from recurring software agreements".
Stay tuned for further analysis later today and tomorrow including the Emptoris response ...
- Jason Busch
What will be interesting to watch is what they do with the Procuri sourcing software because both solutions have a lot of overlap. My guess is that it's gone in a year and customers will be facing pressure to "upgrade" to the new Ariba sourcing solution.
take the money and run!
the multiple was not that bad. VCs just want to get paid.
>>Removal of a low cost competitor.
>>Financial play.
>>Confusions
Who actualy would gain the most, Ariba or it's competitors?