Friday, 4 January 2008

Software AG to Acquire Jacada for $26 million

Software AG is acquiring the application modernization business of Jacada for 26 million dollars in a cash transaction.

The asset deal is expected to expand German-based Software AG’s application modernization portfolio with additional products for modernizing the user interface of mainframe and mid-range based applications. In addition, eight of Jacada’s R&D and support staff will join Software AG insuring continuous product development and customer support.

Software AG will gain over 200 enterprise customers, mostly in the United States, as a result of the acquisition. These customers will benefit from easier access to Software AG’s comprehensive business infrastructure software portfolio.

Currently Jacada’s application modernization products generate around 12 million dollars revenue annually with profit margins above Software AG’s group average.

“With our unique heritage as well as our strength in SOA, Software AG is well-positioned to extend our leadership in the Application Modernization market,” said Karl-Heinz Streibich, CEO, Software AG.

“For current Jacada customers, the acquisition is excellent news. Existing products will benefit from an expanded research & development organization with far greater financial resources. These customers will also enjoy access to a host of complementary products. This is also good news for Software AG as the acquired technology will further strengthen our position within an important market.”

Application Modernization extends the value of custom applications by making their existing functionality and data available via the Web, within a service-oriented architecture (SOA), or as part of an end-to-end business process.

“We expect the deal to enhance our earnings in 2008 while supporting our goal of a 23 percent-24 percent EBIT margin”, said Arnd Zinnhardt, CFO, Software AG.

“This is consistent with our policy of acquisition being EBIT positive within a year or even sooner as in this case. It also underscores our willingness to acquire established businesses that will benefit appreciably from the infrastructure, global reach and efficient management offered by Software AG.”

The asset deal, effective as of January 1st, 2008, will be earnings accretive in 2008.
This is Software AG’s third acquisition of 2007 following the acquisition of webMethods in June for 546 million dollars and 80 percent of SPL Israel in March for 62 million dollars.