Ariba Buys Quadrem for E-Commerce Software

Ariba said Thursday it is acquiring fellow e-commerce vendor Quadrem for roughly US$150 million, in a deal the company says will create the world's largest business-to-business commerce network. The transaction is expected to close by March 31, 2011.

Ariba said Thursday it is acquiring fellow e-commerce vendor Quadrem for roughly US$150 million, in a deal the company says will create the world's largest business-to-business commerce network. The transaction is expected to close by March 31, 2011.

Quadrem's sourcing network contains about 70,000 suppliers in 65 countries, according to a statement. Buyer customers include Nestle, BHP Hilton and Alcoa. It also sells a supplier identification and verification service that will work alongside Ariba's similar Discovery software.

The acquisition comes during a period of consolidation for e-commerce software. Oracle announced plans on Nov. 2 to buy Art Technology Group for $1 billion, while IBM bought Sterling Commerce earlier this year.

Quadrem used to focus on the mining industry but became a more general-purpose provider in recent years, said Ariba CEO Bob Calderoni on a conference call Thursday.

There is no significant overlap between the companies either at the customer level or supplier level, mainly because Quadrem is stronger in regions like Asia and Latin America, he said.

Quadrem also has "good reach" into SAP shops, as does Ariba, he added. Ariba is looking forward to capturing more of the spending activity generated by SAP systems, Calderoni said.

"We believe that while Ariba will continue to operate Quadrem independently following the deal close to not rock the boat with the mining/minerals giants, the long-term play here will consist of an eventual migration onto Ariba technology and closer integration into the Ariba supplier network," wrote Jason Busch of the advisory firm Spend Matters, in a blog post. "As the mining dust settles, this is a deal about scale and industry penetration, not product innovation or solution expansion."

The deal had been rumored for some time, and with it Ariba will "take out an absolute competitor," said Ray Wang, CEO and principal analyst at Constellation Research, in an interview. The primary value for Ariba is the additional scale and reach Quadrem provides, particularly in Latin America, not the software itself, he added.

Customers will benefit in turn, as they will have a larger pool to suppliers to search through for the lowest-cost products, as well as specialized products, Wang said.

Also this week, Ariba announced it had completed the sell-off of its sourcing and BPO (business process outsourcing) services to Accenture. The move will allow Ariba to focus on its supplier network and software business, according to a statement.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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