PracticePeople In PracticePeregrine swoops on rival Remedy

Peregrine swoops on rival Remedy

Ebusiness infrastructure software maker Peregrine Systems is to buy rival Remedy for almost $1bn (£728m) in cash and stock, in an attempt to extend the scope of its product line and expand market reach.

Peregrine will pay $275m in cash and offer 27.9 million shares of its stock. The sale price worked out originally to be around the $1.1bn mark, but when the deal was announced on Monday the sale price value fell to $987m as investors offloaded Peregrine stock following news of the sale.

A Pacific Crest Securities analyst said the market had reacted badly to the sale as there were ‘issues with the amount Peregrine is paying’. According to analysts, the market for such ebusiness software is worth between $2.2bn and $2.5bn. Shareholder approval of the acquisition is still pending.

Peregrine chief executive Steve Gardner said the company plans to integrate Remedy technologies as part of Peregrine’s lifecycle infrastructure management offerings.

The Remedy IT Service Management suite will become the company’s flagship package for small to medium sized companies, while Peregrine’s own products will remain the primary offering for large enterprise customers.

‘We know this is a relatively large acquisition and as such will draw some scepticism,’ said Gardner. ‘The risk-reward is very heavily tilted towards the reward.’

In addition, Peregrine, which writes inventory management and purchasing software, will combine its current line with Remedy’s helpdesk applications. The purchase also gives Peregrine a customer relationship management (CRM) offering that automates sales, customer service and marketing.

Remedy chief executive Lawrence Garlick, who founded the company in 1990, will join Peregrine’s board. Remedy has 1350 employees and some jobs are expected to be eliminated as Peregrine integrates the two companies. Company executives declined to say how many would lose their jobs.

In April, Peregrine bought Extricity for $168m in stock, and last August the company agreed to buy Ottawa-based Loran Technologies for $78m.

Peregrine competes against companies such as Hewlett Packard, Ariba, Commerce One and Microsoft. Market research firm IDC expects the worldwide market for CRM software to reach $11bn by 2003.

  • This article first appeared on vnunet.com

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