Mortice Kern Systems Acquires DataFocus

The companies' products focus on complementary aspects of the NT-Unix interoperability market, a market that is growing rapidly as NT increases its market share.

Two software companies focused on enabling NT-Unix interoperability merged in late January. Mortice Kern Systems Inc. (www.mks.com) acquired DataFocus Inc. (www.datafocus.com) in an all-stock transaction valued at $10 million.

The companies' products focus on complementary aspects of the NT-Unix interoperability market, a market that is growing rapidly as NT increases its market share. "We see Unix and NT combining to form the basis for distributed computing," says Pat Higbie, DataFocus’ CEO.

The combination of MKS Toolkit, which allows developers to use Unix scripting languages on NT, and DataFocus' Nutcracker, which enables Unix applications to run on Windows platforms, will make the merged company a powerhouse in the Unix-NT interoperability market, says Randall Howard, MKS’s CEO. "In both cases, the products were leading in their niche," he explains. "Putting them together was a case of one plus one making three."

DataFocus is a good fit for MKS, according to Dan Kusnetzky, director of Unix and client/server environments at IDC Research (www.idc.com). "If you looked at the places where DataFocus appeared to have weaknesses, those were areas where MKS had strengths," he says. "And the areas where MKS had weaknesses, DataFocus had strengths." Kusnetzky explains that while MKS was strong in development tools but weak in runtime environments, DataFocus has a strong runtime environment but weak development tools. DataFocus also did a poor job of "getting the message out" about their products, he adds.

While DataFocus has made some headway in the ISV community -- in many cases only a few developers at each ISV are using Nutcracker -- overall penetration in the developer community is small, concedes Higbie. On the other hand, 75 percent of MKS's customers are IT directors, CIOs or developers, Howard says, so the merger will open up new opportunities for both companies.

DataFocus and MKS have worked together for several years. DataFocus included the MKS Toolkit in the Nutcracker product suite since 1994. Now, MKS plans to incorporate the suite into its Integrity Framework family of products. Howard also confirms that DataFocus' 28 employees will all remain with the company, bringing MKS' total to almost 350.

Although the deal was "signed, sealed and delivered" Jan. 29, the companies are still working out many of the details, including Higbie's new title, the name of the new business unit that will incorporate MKS Toolkit and Nutcracker and the exact interaction between the products, Howard says. "We've got a lot of exciting plans going forward that we're formulating as we speak," he explains.

Company Bios

Company: Mortice Kern Systems Inc.
Headquarters: Waterloo, Ontario
Ownership: Public, traded on Toronto Stock Exchange
Employees: 320
Products: Web Integrity, Source Integrity, MKS Toolkit
1998 Revenue: $28.6 million Canadian (year ended April, 30, 1998)

Company: DataFocus Inc.
Headquarters: Fairfax, Va.
Ownership: Privately held (prior to acquisition)
Employees: 28
Products: Nutcracker
1998 Revenue: Not available