Critical Path Acquires Peerlogic

SAN MATEO (08/09/2000) - Messaging outsourcer Critical Path Inc. has once again pulled out the wallet to add some punch to its hosted directory services offerings, acquiring San Francisco.-based e-business directory and infrastructure software vendor PeerLogic Inc. on Tuesday in an all-stock deal.

The acquisition, expected to close in late September, will cost about $400 million, and involves 6.4 million shares of Critical Path stock to be issued as the company takes over all outstanding PeerLogic options, Critical Path officials said.

According to David Thatcher, president of Critical Path, based in San Francisco, the two companies have been working together on technical projects "for some time." PeerLogic's directory technology serves as an underpinning for directory offerings from Isocor, which was also acquired by Critical Path late last year.

"Isocor did some offerings with PeerLogic, but PeerLogic held a lot of secrets back," said Thatcher. With the acquisition, Critical Path will be able to "cross-pollinate" its customer base by going back to its messaging clients and offering a more complete directory service and more directory applications, "and maybe lead with the directory as the basis of a full messaging architecture," he said.

PeerLogic's LiveContent LDAP directory will complement Critical Path's InJoin Directory Server and InJoin Meta-Directory engine offerings. Through Critical Path's "allsourcing" strategy, companies can choose to outsource all of their messaging and directory services or just some parts of their systems, as well as taking the option to run and manage Critical Path software themselves, within the company.

The technology combination will allow Critical Path to "go to any enterprise with any configuration of hardware, directories, databases, or infrastructure and singularly enable [customers] to have a consolidated messaging solution that fits their needs," said Thatcher.

"This is one of those kinds of acquisitions that you can look at and say: These two together are worth three or four times what the pieces would be worth apart," said Thatcher, noting that the deal is not expected to inhibit Critical Path's run at profitability in the fourth quarter.

The PeerLogic acquisition marks the seventh company Critical Path has acquired since October of 1999, a spending spree which will probably cool down over the next year, Thatcher said. There will likely be fewer acquisitions during the upcoming year, he added, as Critical Path will "continue to be selective as to what technologies we consider [acquiring]." The company must measure the cost of starting from scratch to develop a service or technology internally versus acquiring another company.

The laundry list of companies Critical Path has acquired over the past 10 months includes Isocor, FaxNet, PKI vendor, Xeti; file delivery, storage and collaboration company, DocSpace; communications vendor, RemarQ; and Netmosphere, a collaboration vendor.

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