MOUNTAIN VIEW, Calif. -- Ariba, Inc. announced that it has signed a definitive agreement to acquireprivately-held SupplierMarket.com, a provider of onlinecollaborative sourcing technologies that allow buyers and suppliers ofdirect and indirect materials to locate new trading partners, negotiatepurchases and collaborate on the Internet.
Ariba will issue approximately 6.3 million shares of stock, representingless than three percent of Ariba fully diluted shares outstanding. Theagreement is structured as a stock-for-stock merger and will be accountedfor as a purchase transaction. The transaction is expected to close by thethird calendar quarter of 2000.
Burlington, Massachusetts-based SupplierMarket.com is a leader inInternet-based collaborative sourcing technology with deep direct materialssourcing expertise, both in the sourcing process itself and in specificcommodity areas. The company, which employs approximately 155 people,already has over 7,700 registered buyers and more than 12,000 registeredsuppliers.
The acquisition will further extend the value and reach of the Ariba® B2BCommerce Platform to create new competitive advantage, savings and revenueopportunities for buyers, suppliers, and marketplaces through streamlinedglobal sourcing. Internet-based collaborative sourcing will also provideAriba with new network-based revenue streams, deeper penetration intovertical and direct materials markets, and accelerated network effect forall on the Ariba platform.
"Sourcing represents the single largest opportunity for organizations torealize savings in procurement costs and to impact supply chain operations,"said Tim Minahan, research director of Aberdeen Group's e-Business practice."Aberdeen research indicates that as much as 80 percent of the savingspotential on the total cost of a product occurs during the initial sourcingcycle. With SupplierMarket.com, Ariba gains a robust collaborative sourcingplatform and related domain expertise that have been proven to effectivelyautomate and enhance processes for identifying and negotiating the optimalsupply chain for both direct and indirect materials. SupplierMarket.com willsignificantly compliment the Ariba platform and should appeal equally tobuyers, suppliers and marketmakers alike."
"We believe sourcing is the next strategic high ground for B2B- it isfundamental to our customers and partners as we work together to buildliquidity in the B2B economy," said Keith Krach, chairman and CEO, Ariba."This acquisition not only deepens the reach of the Ariba B2B CommercePlatform to new customers in new markets, but it also extends our valueproposition to and business opportunities with our existing base ofmarketplaces, corporate exchanges, buyers, suppliers, commerce serviceproviders and partners of all sizes. And we gain the additional leadershipand entrepreneurial zeal of some of the industry's foremost experts insourcing."
"Our proven technology is an ideal, complementary fit to extend the Aribaplatform and leverage its global reach into many of the world's largestbuyers and marketplaces," said Asif Satchu, chairman and president,SupplierMarket.com. "Ariba and SupplierMarket also share the same views onthe importance of innovation, quality technology and customer-drivenresults. We are very excited by the enormous opportunities created by thecombination of our two companies."
Extends Value and Reach of Ariba PlatformBefore buyers and suppliers can transact online they must find each other,collaborate on requirements, and agree to terms. Today, this human-intensivesourcing process is slow, inefficient and highly fragmented with limitedvisibility between buyers' needs and suppliers' capabilities.
By offering integrated, multi-attribute, collaborative sourcing integratedwith its open, global eCommerce platform, Ariba will enable companies andmarketplaces worldwide to increase competitive advantage by more dynamicallycreating and participating in automated supply chains, quicklyre-configuring them to meet changing market and competitive opportunitiesand challenges. Web-based collaborative sourcing has already demonstratedthe ability save buyers money-SupplierMarket.com customers report an average13 percent savings. Integrated collaborative sourcing will also offersuppliers faster access to and integration with Ariba's global network ofonline buyers, lower their cost of sales, and allow differentiation onattributes beyond price.
This acquisition extends the reach of Ariba platform across the most valuedlinks in the B2B value chain, adding new network-based revenue streams forAriba and its customers and accelerating the network effect across theglobal Ariba platform. With its proven capabilities and domain expertise inraw materials and engineered products, SupplierMarket.com also deepens theAriba platform's reach into the more than $5 trillion global directmaterials market, complementing the Ariba platform's marketplace, dynamictrade, collaboration and logistics solutions, as well as the capabilities ofits key partners.
Through the open Ariba Commerce Services Network, Ariba will deliverWeb-hosted sourcing infrastructure to buyers and marketplaces of all sizes,including those using non-Ariba solutions. This will allow marketplaces andbuyers to quickly offer their own branded sourcing services to their supplychain participants for greater competitive advantage and fastertime-to-liquidity.
"B2B marketplaces can offer collaborative sourcing to their participants tospeed time to liquidity, build lasting value and stickiness, and createscalable revenue streams," said John Mumford, acting CEO of e2open.com, aglobal business-to-business e-marketplace for the computer, electronics, andtelecommunications industries. "SupplierMarket.com technology, integratedwith the Ariba platform and offered through a marketplace's own brand, is ahighly attractive proposition to marketmakers."
Adds New Sources of Network RevenueCollaborative sourcing capabilities will create new network-based revenuestreams that will scale with the size and value of B2B transactions.SupplierMarket.com's proven technology and value-based business model willbe highly scalable as it is extended to a large and growing network ofbuyers, marketplaces and suppliers using the Ariba platform and its openWeb-based services.
Accelerates Network EffectThe acquisition will further accelerate the network effect on the Ariba B2BCommerce Platform, combining the 12,000 registered SupplierMarket.comsuppliers with the Ariba platform's existing 20,000, while providing ascalable infrastructure for all suppliers around the world to self-registervia the Web with a standard browser. As buyers and marketplaces of all sizesoffer their own sourcing services powered by Ariba and SupplierMarket.cominfrastructure, they will attract additional suppliers that can be accessedby all interconnected participants on the Ariba platform. As these buyersand suppliers attract one another to the Ariba platform, it will furtheraccelerate network effect and liquidity.