The imminent acquisition of content management software vendor Hummingbird Ltd. by Symphony Technology Group will trigger further mergers and acquisitions in this space, according to a Canadian analyst. The marketplace is ripe for consolidationJoel Martin>Text
“The marketplace is ripe for consolidation,” said Joel Martin, vice-president of enterprise software at Toronto-based IDC Canada Ltd. “There are a number of small niche players out there. So it’s only a matter of time before we start seeing more such acquisitions.”
On Friday, Hummingbird Ltd. said it agreed to be purchased by Symphony Technology Group in a deal valued at US$465 million. Based in Palo Alto, Calif., Symphony is a holding company that employs more than 7,000 employees worldwide through its various firms.
Martin predicts the imminent acquisition of Hummingbird is likely to have a domino effect, with other industry heavyweights joining the fray. “The IBMs and Microsofts of the world will be looking to acquire smaller companies that align with their own business strategies. How soon it will happen is hard to tell.”
At a conference held last Friday, Hummingbird senior management said they chose Symphony after much consideration. A special strategic committee was set up five months ago to look into bids for acquisition. “We chose Symphony because it is a technology company and it put all its money on the table,” said Fred Sorkin, chairman of the board of directors at Humingbird Ltd.
It remains to be seen how Symphony will manage the combined workforce after the acquisition. Hummingbird employs more than 1,400 people and serves more than 33,000 corporate customers worldwide. “I think Symphony will keep the staff of enterprise content management and connectivity sectors together. But it is a bit early to say anything right now,” said Sorkin.
According to IDC’s Martin, only time will tell what this all means for Hummingbird’s employees. “[Hummingbird’s] customers will have the option of selecting competitors’ products. So the challenge for Hummingbird is to assure its customers that this acquisition is not going to affect its quality of service.”
Martin says acquisition will help Symphony build up its portfolio. “This is Symphony’s way of making money. It acquired Hummingbird at what it believes is a fair price. Symphony believes that Hummingbird’s market value will grow and the acquisition will return money to its own stakeholders.”
Symphony owns several companies including Information Resources Inc. and Gers Inc.
The acquisition is expected to close in July.
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