Thursday, August 10, 2006

IBM filing to purchase FileNet

Today IBM announced that it has agreed to purchase FileNet for $1.6 billion. FileNet is one of the leading companies in content and document management software space. The company is headquartered in Costa Mesa, California, and has been around for an impressive 24 years. Last year, FileNet generated about $422 million in revenue.

IBM will integrate the FileNet product into its content management software. This will be interesting, since the IBM content management software has significant overlap with FileNet’s P8 suite. (An example of this is the fact that both companies offer Business Process Management (BPM) systems.

Apparently, the purchase was done mostly to give IBM access to FileNet’s customer base. "This leaves a company like FileNet in a difficult position," said AMR Research analyst Jim Shepherd.

IBM will pay $35 per FileNet share (a slight premium over Wednesday’s share price). The transaction is expected to close in the fourth quarter.

It would appear IBM is on a spending spree. The FileNet deal comes on the heels of the $740 million purchase for MRO Software (an application for managing physical assets) and privately held software company Webify Solutons.

IBM's software group has bought more than 50 companies in the past 10 years--suggesting that the larger companies just continue to get larger!

We are a customer of FileNet. Do you think we should be concerned for the future of the FileNet software? If people like Mr. Shepherd are correct, that this is an acquisition purely to acquire customers--and I think he is correct--then we should be concerned.


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