Computer Associates in a conference call Thursday announced it had agreed to acquire network performance management software maker Concord Communications for about US$330 million in cash.
CA, which earlier this week announced its plans to pump up its systems and security management suites through acquisition and internal business unit realignment, says Concord's technology will enhance CA's Unicenter with IPv6, ATM, frame relay, voice, wireless and business service management capabilities.
"With CA's acquisition of Concord, we can provide our mutual customers with the broadest and deepest enterprise systems management offerings in the industry," CA President and CEO John Swainson said in a statement. "This strategic combination significantly advances CA's position in the high-growth network and systems management marketplace, and, with the integration of our Unicenter solutions, will extend CA's overall leadership in systems management."
According to COO Jeff Clarke and CTO Yogesh Gupta, Concord will also enable CA to sell integrated network and systems management products. Typically, CA's strength is based more in systems management, and Concord offers the software company a breadth of network device knowledge and infrastructure management capabilities.
"When we do lose in accounts, it's typically because of network device support. Customers are simply not buying systems management independently any more. The are buying systems and network capabilities integrated. This acquisition will help us keep up on the network front," Clarke said on the call.
The deal, which is expected to close within three to four months pending regulatory approval, would equip CA with additional network, system and application management capabilities from Concord's flagship eHealth software suite, but CA also stands to gain the assets of recent Concord purchases: Aprisma Management Technologies and Vitel Software. Costing Concord US$93 million and US$4 million, respectively, the Aprisma and Vitel purchases gave the mid-tier software maker technology to address IT business service management with Aprisma's Spectrum software as well as voice, PBX and converged network management technologies from Vitel.
The acquisition will also add about 3,500 Concord customers to CA's customer roster. According to Concord executives, the acquisition will give its engineers development and sales resources it doesn't have now. With 70 sales people, Concord will benefit from CA's larger worldwide sales force, which includes about 1,000 sales reps.
"This acquisition will equip Concord with more powerful technology and sales assets than the company would have accomplished on a stand-alone basis," Concord CEO Jack Blaeser says.
As the Concord acquisition will pump up its enterprise systems management suite, CA has also been adding to its security management wares. CA last month made official the purchase of mainframe access management technology the vendor had been reselling from InfoSec. And last year CA put down about US$430 million to acquire identity management vendor Netegrity. The Netegrity buyout adds secure Web access and provisioning technologies to the authentication, authorization and administration products in CA's eTrust Identity and Access Management Group.
Last summer CA acquired PestPatrol, a firm marketing anti-spyware software to enterprises, small businesses and individual consumers. CA paid an undisclosed amount of cash for the Carlisle, Pa., company. CA plans to incorporate the PestPatrol products into its eTrust Threat Management software suite, which protects against viruses, spam and inappropriate use of the Web by employees, the company said.
The details of the acquisition involve CA paying for Concord in an all-cash transaction valued at US$17 per fully diluted common share, or approximately US$330 million. CA will also assume approximately US$20 million in net debt from Concord for a total purchase price of US$350 million.
Concord will become part of CA's enterprise systems management business unit. CA expects that most of Concord's 640 employees will stay with the company. Also Thursday, Concord estimated it will lose between 11 cents and 15 cents per share for the quarter ended March 31, on revenue of between US$28.5 million and US$29.5 million. The acquisition is expected to be neutral in fiscal 2006 and slightly accretive in fiscal 2007, CA says.