XML Consolidation Begins; Vignette, WebMethods Buy

BOSTON (05/24/2000) - This week brought the start of industry consolidation among the software vendors pioneering the use of XML, as WebMethods Inc. said it would buy Active Software Inc. and Vignette Corp. announced it would acquire OnDisplay Inc.

WebMethods in Fairfax, Virginia, intends to buy Active Software, located in Santa Clara, for US$1.3 billion in an all-stock deal. And the Austin, Texas, company Vignette signed an agreement to acquire OnDisplay in San Ramon, California, for about $1.8 billion in a stock swap.

WebMethods, which lost about $18 million last year on revenue of $23 million, makes a business-to-business server that enables XML-based storage and the exchange of business documents, such as orders and shipment information, between trading partners.

XML is the format-neutral document tagging structure developed by the World Wide Web Consortium. It is the primary technology for translating and storing documents that may have originated in different formats, such as the proprietary SAP AG and Baan Co. NV formats, or the older e-commerce standard called Electronic Data Interchange.

WebMethods CEO Phillip Merrick says that acquiring Active Software, which markets the ActiveWorks Integration System for automating end-to-end business processes, strengthens WebMethods' ability to help corporations integrate their back-end systems for e-commerce purposes. The two firms already have some customers such as Federal Express in common.

"We're now the clear market leader in this business-integration space," he claims. However, Wall Street, in volatile trading, sent WebMethods' stock down 17 percent to $72 last Monday. Active's stock dropped 3 percent to about $32 at the close of trading last Monday.

Once the WebMethods acquisition of Active Software is completed, WebMethods will have about 600 employees and offices on both U.S. coasts.

In yet another XML blockbuster deal announced the same day, Vignette, which markets the V/5 platform for XML-based document management and publishing, said it would buy OnDisplay, which sells the XML-based repository, CenterStage. The combination will make Vignette a company of 2,000 employees and 870 customers.

Greg Peters, CEO at Vignette, and Mark Pine, CEO of OnDisplay, were busy proclaiming the wisdom of the merger of the two companies this week. "Together with Vignette, we now provide the industry's only true end-to-end solution," Pine said.

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