At present, EDI is the most prevalent standard for B2B collaboration and the transmission of data, but many companies are making the switch to XML for Internet-based collaboration. Making the language switch is the specialty of XMLSolutions, who offers transformation technology to companies trying to bridge the standards gap.
The combination of XMLSolutions' collaboration technology and Vitria's EAI, B2Bi, and Business Process Management solution will help us to define the platform upon which the next generation of ebusiness -- value chain collaboration -- will be conducted, said JoMei Chang, president and CEO of Vitria. The acquisition of XMLSolutions will also provide us with a talented group of employees who will help us to quickly bring this enhanced solution to heavy EDI users across multiple industries, including aerospace, automotive, retail, and transportation.
According to the acquisition, the total purchase price for the transaction will be approximately $15 million, of which $7 million will be paid at the closing in cash to preferred shareholders, and $8 million will be used to retire short-term debt and other liabilities of XMLSolutions. Vitria will account for the acquisition as a purchase and expects to complete the transaction in early April.
The acquisition will add approximately $4.5 million in expense to our second fiscal quarter, and approximately $3.5 million per quarter thereafter, said Paul Auvil, chief financial officer of Vitria. We do not expect the acquisition to add incremental revenues in the short term. However, we do expect the acquisition to help accelerate the expansion of our business into new vertical markets, such as manufacturing, financial services, and energy, where companies are looking to leverage and extend their significant investment in EDI.