Strategic sourcing solution provider adds spend analysis specialist
Malvern, PA February 2, 2004 Verticalnet, a provider of strategic sourcing and supply management solutions, has acquired Tigris Corp., a privately held strategic sourcing and supply chain consultancy based in New York City, in a stock and cash deal that combines Verticalnet's spend analysis and supply management software with Tigris' spend analysis and strategic sourcing expertise
The transaction is effective as of January 30, and the combined company will operate under the Verticalnet name. Tigris founder and CEO, Brent Habig, is joining the Verticalnet executive team as executive vice president of sales and consulting.
The combined company is expected to more than double Verticalnet's revenue in 2004 as compared to 2003.
Under the terms of the merger agreement, Verticalnet issued 1,870,450 shares of Verticalnet common stock plus $3.5 million in cash. In addition, Verticalnet assumed the Tigris stock option plan and issued options to acquire 751,741 shares of Verticalnet's common stock.
"This deal comes at a critical time in the evolution of the supply management market," said Nathanael Lentz, Verticalnet's president and CEO. "Spend analysis, already a growing area of importance within supply management, is poised for growth, and Verticalnet is primed for the opportunity. Customers are demanding a flexible combination of software and services in spend analysis, strategic sourcing, and other supply management sectors. This is exactly what the combination of Verticalnet and Tigris expects to provide to the marketplace."
Tigris is a specialized strategic sourcing and supply chain consultancy offering services designed to help companies leverage their data and information to make better business decisions. The firm has particularly focused on enterprise-wide spend analysis and strategic sourcing engagements for such large, complex spend categories as transportation and packaging.
Tim Minahan, vice president of supply chain research at Aberdeen Group, suggested that the Verticalnet-Tigris pairing could make sense given the importance of spend analysis as a first step for any supply management initiative.
"A successful spending analysis solution must combine category expertise for proper classification and strategy development with automation to speed classification and ensure repeatability," Minahan said, adding that the combination of Verticalnet's spend cleansing and classification technology and Tigris' sourcing and category expertise could product an attractive spending analysis offering.
Verticalnet and Tigris have already begun to integrate sales, marketing and administrative functions. Customer delivery organizations focused on consulting services and software implementation remain intact to ensure Verticalnet and Tigris customers experience consistent support, the two companies said.
The combined company will continue with all existing client deliveries as planned, but a single platform is immediately available to new customers. Over the next several months, new versions of the Verticalnet software will be released that incorporate Tigris' spend analysis and category sourcing knowledge into upgraded Verticalnet product offerings.
Verticalnet will also continue to support consulting and technology offerings on both the Verticalnet and Tigris platforms until clients wish to upgrade to future versions.
"Through our intensive integration process, we will remain focused on the true sources of value creation - customers, people, and innovation. We will measure our success in terms of the speed of integration, customer continuity, employee retention, and the immediate ability to offer enhanced solutions to our customers and prospects," said Lentz.
A recent survey by the firm Capital Consulting & Management Inc. (CCMI), conducted in conjunction with Supply & Demand Chain Executive, found a compelling demand for spend analysis tools and processes. In the survey of over 400 purchasing and supply management professionals, a full two-thirds of respondents reported that they were actively pursuing initiatives to improve their spend analysis tools and capabilities.