Ariba Swallows TradeX
The union of two leading commerce server vendors portends a major consolidation in the emerging business-to-business electronic marketplace arena.
Ariba Inc. (www.ariba.com) recently announced plans to acquire Atlanta-based TradeX Technologies Inc. (www.tradex.com) in a $1.86 billion stock swap expected to close in Q2.
While both companies offer commerce server software, the deal is aimed at gaining a foothold in the fast-growing business-to-business electronic marketplace arena, of which TradeX is an original pioneer. "As the network economy has evolved, it's clear that B2B e-commerce transactions will not only be centered around enterprise buy-side applications, but also around Net markets," says Keith Krach, Ariba chairman and CEO. "We believe we are uniquely positioned to power commerce across both enterprise solutions and new Net markets."
Analysts predict strong growth in electronic marketplaces. GartnerGroup (www.gartner.com) predicts 7,500 to 10,000 new markets by 2002. Currently, Ariba powers 26 electronic marketplaces, and the TradeX acquisition adds 18, including MetalSite and PlasticsNet. TradeX also provides procurement solutions to American Express and about 50 Fortune 2000 corporate buyers, and reaches 20,000 suppliers. "Our businesses were ultimately going to converge," with a lot of overlap already in the customer base, Krach adds.
The acquisition vastly expands the number of vendors hooked into the Ariba Network. "We've always advocated 'speed-to-spend' -- capture the largest corporate buyers, and create the greatest market liquidity first," says Krach. "That attracts the most suppliers and partners, and creates the critical mass around the Ariba Network."
Some Ariba customers welcomed the expanded capabilities the acquisition brings. "We believe that this is a sound strategic acquisition for Ariba and complementary to Chemdex's focus on multiple vertical markets," says David Perry, president and CEO of Chemdex (www.chemdex.com), an online marketplace for the laboratory and life sciences industry. "This acquisition will accelerate our ability to collaborate with Ariba in existing and future net markets."
While corporate name changes are likely, none have been made as of yet, says Krach. The TradeX announcement closely follows Ariba's agreement to acquire Trading Dynamics, dynamic trading and auction applications.
The latest version of Ariba's Operating Resource Management System (ORMS, Release 6) e-commerce procurement package is tightly integrated with Ariba Network, which the vendor announced in mid-1999. Ariba ORMS runs on Windows NT, Sun Solaris or HP-UX. TradeX application servers, which support sell-side as well as buy-side functions, support Windows NT, Solaris, and AIX.