Updated from 7:48 a.m. EDT
Business communications software makers, among the most highly publicized and eagerly sought stock offerings of the past year, came together in two billion-dollar deals Monday.
, of Austin, Texas, offered stock it valued at $1.7 billion for San Ramon, Calif.-based
. And Fairfax, Va. -based
said it would buy
of Santa, Clara, Calif., for stock valued at $1.3 billion.
Wall Street reacted negatively to the proposed acquisitions, as the stocks of Vignette and webMethods, the two acquirers, fell very sharply, reducing the values of the deals.
All four companies market software to the business-to-business sector. None has turned a profit.
"In the past year or more, a flood of new companies have emerged to help meet the challenge of e-commerce deployment," said Drew Brousseau, analyst for S.G. Cowen Securities. "You're seeing the early stages of what will inevitably be a convergence in the industry."
S.G. Cowen rates Vignette strong buy and OnDisplay, for which it co-managed an initial public offering, buy. The firm does not cover webMethods or Active Software.
Under the terms of its deal, Vignette will issue 1.58 shares for each OnDisplay share. The former says it makes "e-business application software products and services;" the latter "e-business infrastructure software applications for powering e-business portals and e-marketplaces." The combined companies will employ 2,000.
Shares of Vignette, which have traded as high as 100 5/8 since coming public last year, plunged 12 1/2, or 29%, to 31 5/16 around midday Monday. OnDisplay shares, which also went public last year, fell 4 1/8, or 8%, to 49 1/8, off their high of 132 1/2. (Vignette closed down 8 15/16, or 20%, at 34 7/8, while OnDisplay closed up 7/8, or 2%, at 54 1/8.)
Under the second deal, Active Software shareholders will receive 0.527 share of webMethods. The acquirer makes software that facilitates transactions between the varying computerized procurement systems employed by different companies. Active makes the ActiveWorks Integration System, which facilitates communication between programs within a corporation's computing system.
The combined companies, to be called webMethods, will employ 600. Phillip Merrick, chairman and chief executive of webMethods, will continue in that capacity.
Competitors to Active include
WebMethods stock dropped 15 7/16, or 18%, to 71 9/16 around midday Monday. The company, which became public this year, has traded as high as 336 1/4. Active Software, which also became public this year, slipped 15/16, or 3%, to 32 1/16. The stock has traded as high as 149 1/8. (WebMethods closed down 15, or 17%, at 72, while Active Software closed down 15/16, or 3%, at 32 1/16.)