Acquisitive accounting software developer Solution 6 is set to face its biggest integration hurdle yet, after purchasing Sausage Software and a range of other e-commerce assets from Telstra in a deal worth about $2 billion.
The acquisitions are the latest in a swathe of purchases Solution 6 has made during the past 12 months (see page 4), and have left some industry observers questioning whether the software developer has a clear strategy in place.
Solution 6 has signalled its intention to be an application service provider to small and medium service companies and has moved to become a leading player in the global accounting software market. Graham Penn, research director at IDC, said those strategies failed to align with the company's $1.6 billion acquisition of Sausage Software, a provider of front-end Web development tools.
Analysts said it was also unclear how Solution 6 would benefit from the $237 million worth of other e-commerce assets it is to acquire from Telstra, including the carrier's e-Connect procurement package, the Telstra Financial Management Services suite and a 30 per cent stake in PlesTel, makers of the Commander telephone system.
However, Chris Tyler, chief executive of Solution 6, said the acquisitions would fill voids in the company's product line, specifically in terms of customer-facing activities.
"The acquisition of these assets will significantly advance the development of a robust, global, industrial-strength e-business platform for enterprises.
"This agreement will also dramatically extend our delivery capabilities to our key customer base - time-based professionals," Tyler said.
Meanwhile, Telstra officials said the deal was part of the telco's strategy to retain core Internet assets - such as Telstra.com - within the company, while seeking to partner with specialists on vertical market e-commerce applications.
To that end, Telstra has also increased its stake in Solution 6, which officials claim is now the biggest business of its kind in the Asia-Pacific region, from 24 per cent to 40 per cent.
Penn said it was a fundamental problem within the local IT industry that companies failed to clearly articulate their strategies.
But he pointed out Telstra had been criticised for its lack of e-commerce direction and the increased involvement with Solution 6 could be a response to that criticism.
Buy, buy, buy - Solution 6's strategy for growthSolution 6's acquisition strategy was the main cause of the company's overall operating loss of $65.97 million for the six months to December 1999. But that hasn't stopped the company aggressively pursuing new targets.
* Acquires Sausage Software and some other e-commerce assets from Telstra in a deal worth about $2 billion.
* Enters agreement to acquire FishTech & Partners, an Australian application integration middleware software and services company, for $19 million in scrip.
* Acquires Elite Information Group, a US-based provider of software products and services to the financial, legal and professional services sectors, for $150.5 million.
* Acquires online legal information provider, Lawpoint, from Telstra for $40 million.
* Takes a 15 % stake in investment banking group Hartley Poynton for $14.7 million.
* Acquires AlphaWest, a Perth-based IT services provider.
* Acquires Dataline Systems, a developer of financial transaction software.
* Acquires Iguana Information Services, an online provider of stockmarket information, for $1.4 million in cash.
* Acquires Montgomery Baggett Drews, a US-based accounting firm.
* Acquires legal and accounting software specialist CMS/Data for about $46 million.
* Signals intention to purchase all the assets of its New Zealand-owned franchise operation, Office Resource Centre for $A2.5 million worth of cash and scrip components* Announces intention to buy financial software house Emphasys for $4 million.
* Acquires the Australian and Singaporean operations of knowledge management software specialist CVSI.
* Makes an unsolicited bid for Canadian software company PC Docs which is rejected.