e-Sourcing solutions provider takes on long-term agreements with Big Three
Pittsburgh, PA — January 5, 2004 — e-Sourcing and online auctions pioneer FreeMarkets has agreed to acquire the sourcing and services assets of Covisint, the auto industry e-marketplace-turned-solutions provider, in a deal that scores FreeMarkets long-term agreements with Detroit's Big Three automakers.
"The purchase will position FreeMarkets as the premier provider of sourcing technologies and services to the automotive industry," FreeMarkets said in a statement.
The agreement, which was announced December 31 and is subject to customary closing conditions, is expected to be completed in early January.
Under the terms of the agreement, Covisint will transfer its customer contracts for auction services to FreeMarkets. These contracts will provide committed revenue to FreeMarkets over the next three years.
As a result of the acquisition, FreeMarkets will serve automakers DaimlerChrysler, General Motors and Ford under long-term agreements using its own sourcing technology and services. FreeMarkets may also provide its solutions to such original equipment manufacturers as Mitsubishi, Nissan, Renault, PSA Peugeot, Fiat and other Covisint auction services customers.
Also as part of the deal, FreeMarkets will hire select Covisint auction services employees.
"FreeMarkets has built a strong presence in the automotive industry over the years," said FreeMarkets' President and CEO Dave McCormick. "Our acquisition of Covisint auction services will further strengthen and expand this position, and enable us to continue providing companies across the entire automotive supply chain with technology and services to address successfully the sourcing challenges they face."
FreeMarkets said that to date it has helped companies in the automotive industry source over $20 billion in goods and services and identify savings of more than $3.5 billion.
Bob Paul, CEO of Covisint, said that the sale of it provider's auction services to FreeMarkets was "a logical and evolutionary step" as Covisint focuses on providing supplier management portals and data messaging services to auto industry clients.
"We began building our auction service business when the technology was in its infancy, and it is now time to turn it over to someone that has sourcing technology and expertise as a core competency," Paul said.
