Recently in Mergers & aquisitions Category

For several years Thomson Learning was my largest consulting customer, and while I have not worked closely with the group for several years, it would be inappropriate for me to analyse or comment. I just wish to note for the record, quoting directly and exclusively from Thomson's own press release of October 25:

Thomson Announces Strategic Realignment of Operations; Company to Sell Education Businesses

Highly Focused Strategy On Electronic Solutions For Professionals Will Drive Growth And Enhance Shareholder Value

Strategic Realignment Highlights:

+ Thomson organizational realignment designed to focus on electronic workflow solutions strategy and drive operational efficiencies

+ Thomson to divest education assets: higher education, careers and library reference; corporate e-learning; and e-testing

+ Vice Chairman and Chief Operating Officer are appointed

Stamford, Conn. , 10/25/2006

The Thomson Corporation (NYSE: TOC; TSX: TOC) today announced a realignment of operations to sharpen its strategic focus on providing electronic workflow solutions to business and professional markets and better position the company for future growth. As part of the realignment, which becomes effective January 1, 2007, Thomson intends to sell its Thomson Learning businesses, including those serving the higher education, careers, library reference, corporate e-learning and e-testing markets.

"These initiatives are part of the natural evolution of Thomson as we pursue our strategic vision," said Richard J. Harrington, president and chief executive officer of Thomson. "The market has validated our strategy of providing workflow solutions to business and professional customers, and we will continue to build on our strengths, reframe our markets and exploit technological innovations.

"Thomson Learning is an excellent business, but it does not fit with our long-term strategic vision," Mr. Harrington said. "After the sale of Thomson Learning, the vast majority of our sales will come from electronic products and services with recurring revenues that are currently growing at high rates. In addition, the sale will provide us with substantial resources to take advantage of opportunities to accelerate the development of our core businesses and explore adjacent markets that are consistent with our strategy."

Thomson Learning Sale

"Thomson Learning has leading positions in higher education, global reference, e-testing and corporate training," Mr. Harrington said. "This well-managed and profitable business consistently delivers above-market growth and is well positioned to pursue opportunities in the global markets it serves."

Thomson expects the divestiture of the Thomson Learning businesses to encompass three independent sales processes, each on its own schedule.

(The press release continues with details of divestitutres and staff changes.)

And so it goes...How sad. Print is certainly becoming a dirty word!

The summer of '06 gave credence to the notion that multiple ECM and BPM suite vendors are preparing for the business buyer at the ECM/BPM intersection. Examples include:

June's announcements included EMC/Documentum's acquisition of ProActivity, Metastorm's integration with Documentum, Hummingbird, Interwoven and Meridio -- quickly followed by a major upgrade of its BPMS suite, which includes a strong focus on strengthening its Sharepoint integration. Not to be outdone, Ultimus announced its iBAM Suite, targeting non-technical business users who need visibility into BPM-enabled business processes. The tagline? "Go from Zero to BAM in less than 10 minutes."

July's announcements included one from the open source community, a hot arena across all content technology categories. Describing its offering as the first Zero-Code BPMS, Intalio describes its BPMS 4.2 product as ideal for "complex business processes that include Web Services orchestration and web-based human workflow."

August's IBM-FileNet merger got lots of press and continues to focus on "synergistic BPM technologies." Although this news seemed to overshadow the Oracle-IDS Scheer partnership, this announcement also deserves attention for those following the chase between Oracle, IBM and Tibco Software (who seems to have finally made significant progress in 2006 on maximizing its 2004 Staffware acquisition.

These "catch up" summer activities are strong signals to competing vendors already traveling the path toward meeting the requirements of complex business processes that must combine data-centric BPM integrations (including SOA) with content-centric, human-driven interactions. Players with earlier investments or partnerships supporting this roadmap include BEA's Fuego acquisition in March, the Vignette-Lombardi alliance in April, Interwoven's strategy to bolster visibility for its Fujitsu partnership, and Global 360's steady progress toward "bridging the islands of process automation across BPM, transaction management, ERP and content management systems" by integrating its G360 EX and G360 BOS products.

Now comes the fall and expectations for 2007 products that are not simply infrastructure-ready, but rather solution-specific ready. It is our belief that applying integrated ECM/BPM solutions to real-world issues requires the ability to handle hybrid, complex, and high-volume processes in a manner that enables rapid deployment through ease of use and pre-packaging of vertical or horizontally-specific capabilities including workflow, modeling objects, business rules, and end-user dashboards for monitoring and analytics. This will be critical to vertical uptake in industries such as Banking, Insurance and Telecommunications as well as horizontal arenas such as compliance, claims processing, accounts payable, and human resources.

Some vendors can already point to these capabilities, which ultimately cross the unstructured content and structured data worlds; Others are well on their way to demonstrating them. The fall of 2006 should be an interesting quarter.

Update: Promoted from comment to Frank's one-liner.
Big news indeed, and in fact IBM's fourth largest acquisition of any kind - ever - according to the AP. One of the more compelling takeaways from the analyst conference call is the effect on the market's ability to deliver cohesive vertical and horizontal solutions in the ECM-BPM intersection. (blog archive)

FileNet and IBM reps repeatedly stressed their ability to "provide content-centric BPM in the context of business processes." Not hard to envision. FileNet's historical investment in its BPM modules is a large part of its competitive differentiation. On equal par from a SOA/BPEL-driven perspective, IBM's v6 Websphere BPM products provide the STP/integration capabilities for the sibling requirements. The opportunity for a technology merge is intriguing. Fully preparing for the intersection is clearly a primary goal; as per the call, "the timing is good for a combination of forces." I wouldn't call it a smooth road however, despite the promises of "nothing but goodness for everyone."

Although the two former partners and competitors stress the "preservation and enhancement" of both ECM platforms (the ECM divisions will become one), the holy grail of post-acquisition integration (culture, technology & strategy) could be quite significant in this case.

More when I'm not on vacation, but obviously this is big news.

See updated links for 5/30 and 5/31 below.

Friday was a busy day and I did not see the press release on the Hummingbird acqusition until about 3pm. Curiousity killed that cat and I took some time to listen to the archived conference call(find the number in the "Conference Call" section of the Hummingbird press release.)

I got more than I bargained for on a Friday afternoon. Not surprised to find an audience of financial analysts, I was more than a bit surprised to hear comments such as "stunned," "ridiculous," and "questionable as to fiduciary responsibility." Cetainly, many of the financial analysts asked (redundant) questions in the manner that reporters would use, i.e. slow, steady, and determined to get an answer. Others however, were quite more emotional than I've ever experienced from an acquisition- or earnings-type call -- or from financial analysts for that matter. Some analysts advised shareholders to "vote against this" with vigor. It got so interesting that I realized I had listened to the entire call without intending to.

I must say I too was "stunned" at the announcement because the acquisition was not a technology to technology play. I have followed Hummingbird for years and think they have done a great job educating the market on ECM as well as expanding a very tangible beachhead in the legal vertical. So *my* stunned was that I thought it would be... well, just someone else! Just who is Symphony Technology Group? According to their Web site, it is a strategic holding company. According to Hummingbird, it was the only *serious* bidder they spoke to about an acquisition and talks began in February.

The "open door or not" title describes the crux of the emotion on the part of the financial analysts. In essence, Hummingbird described a process in which Symphony approached Hummingbird. Hummingbird did not solicit other bids from other financial or technology vendors. At the same time however, Hummingbird was repeatedly adament at stating that Symphony was the only serious bidder. Clearly there was at least one more.

In response to repeated analysts' opinions that the valuation was extremely low, that the company was worth far more, and that the bidding process should have been more open, the Hummingbird response was: "The door is now open, other bidders can come to the table; we were not shopping - we did not put ourselves on the block." The "or not" part of the "is the door open?" question is that simultaneously, Hummingbird stated that the process will move swiftly and the company is confident that Sympony has no other technology company holdings that overlap Hummingbird's expertise in ECM. Also according to Hummingbird, "nothing has changed in our company" and there are no management contracts in place with Symphony for the deal.

The documents on full disclosure on the details will be available tomorrow, Tues 5/30, according to Hummingbird. I am sure more blog entries will add to my report. I'll update this entry with links I find tomorrow.

Reuters has weighed in...

Tony Byrne from CMSWatch has weighed in...

Tuesday 5/30 Update:

Computer Business Review Online has weighed in...

Wednesday 5/31 Update:

Canada.com's National Post has weighed in... Note the quote "Fred Sorkin and Barry Litwin, Hummingbird's chairman and chief executive, respectively, own about 12% of the outstanding shares and don't want the company bought by another technology firm. The company might cut [our] products," said Mr. Sorkin, although all offers will be entertained. This leads to distraction and lack of value creation."

Arrangement Agreement Papers Available... The site is www.sedar.com, "the official site that provides access to most public securities documents and information filed by public companies and investment funds with the Canadian Securities Administrators (CSA) in the SEDAR filing system." Search for Public Companies = Hummingbird + Date Filed = May 26,2006 if you are interested. Curiously, the Document Type is listed as "Other".