Advised Software AG on its acquisition of webMethods, a business integration and optimisation software company
Apr 2007
$546 million
  • Sector: Infrastructure Software & Cybersecurity
  • Deal Type: Strategic Deals; Public Deals
  • Engagement type: Buyside
  • Size: $546 million

Arma Partners is pleased to announce it acted as exclusive financial adviser to Software AG (TecDAX, ISIN DE 0003304002 / SOW), Europe’s largest systems software and Service-Oriented Architecture (SOA) provider, on its proposed acquisition of webMethods, Inc. (NASDAQ: WEBM), a leading business integration and optimization software company, announced on April 5th. The two companies have entered into a definitive agreement for Software AG to acquire webMethods in a cash tender offer for $9.15 per share, or approximately $546 million.

The transaction will significantly strengthen the combined company’s leadership in the fast-growing SOA and Business Process Management (BPM) markets, bringing an expanded product portfolio to a global customer base of over 4,000 organizations and 100 partners in complementary geographies around the globe. Specifically, Software AG will more than double its customer base in North America. This acquisition also builds on the strong reputations and market positions of both companies and is a major step in Software AG’s recently announced plans to more than double its revenue to €1 billion (USD $1.3 billion).

The transaction has been approved by the Supervisory Board of Software AG. webMethods’ Board of Directors has also approved the transaction and will recommend that their shareholders accept the offer. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close during the second quarter of 2007.

– webMethods (NASDAQ: WEBM): a leading provider of business integration and optimization software, targeting Global 2000 customers and major government agencies

– Founded in 1996 and listed on NASDAQ, webMethods had revenues of $209m in 2006, employing over 800 staff and supporting 1,500 customers worldwide

– Forrester had rated webMethods’ integration-centric BPM product as a “Leader”

– Software AG (Frankfurt: SOW.GR): a global leader in mission-critical software infrastructure solutions based on open standards, with revenues of €483m in 2006 and a stated goal of exceeding €1bn in revenues by 2011

– Listed on the Frankfurt Stock Exchange, Software AG has more than 35 years of global IT experience and had over 2,600 employees serving customers in 70 countries prior to this acquisition

– By creating an industry-leading Service Oriented Architecture (SOA) and Business Process Management (BPM) product portfolio with unmatched depth and breadth, this sector-changing acquisition propelled the combined company into the top three integration-related software providers worldwide

– The complementary nature of the product portfolio, customer base, geographic reach and vertical-specific expertise, coupled with Software AG’s aggressive growth plans, made this a truly transformational acquisition for Software AG

– For webMethods, this transaction provided significant scale and the backing of a large, financially stable software house, enabling them to focus on driving further market leadership in their integration-centric BPM product line by leveraging the combined sales force and system integrator/reseller relationships

– Arma Partners has a long-standing relationship with Software AG and was retained to run this process after positive contributions during previous strategic target search exercises

– Through careful negotiation and bidding tactics, Arma Partners struck a fine balance to ensure that Software AG’s bid was superior to others from several interested strategic buyers, yet at the same time ensured significant EPS accretion for the combined company

– The transaction has been widely applauded by industry observers, Software AG’s stock price rose 8% on the day of announcement (creating over $200m of immediate shareholder value), and the acquisition was described by the 451 Group as “the largest and arguably most significant deal yet across the whole SOA landscape”

– The deal took less than two months from engagement to announcement date