03.14.05
Picking Up Where They Left Off
As the product of M&A, Ascential is one of the few companies that never got over its head intermingling disparate organizations and incompatible technologies. It took awhile, but the company’s shrewd handling of the $1 billion sale of Informix to IBM almost exactly four years ago didn’t hurt. During a period where most ISVs have hemorrhaged red ink, Ascential has mostly been profitable and presently carries nearly a half billion dollars in the bank.
Its main rival, Informatica, initially led in the movement of data to and from relational databases thanks to an engine combining a visual front end with a powerful meta data system that made transformed data transformation from ugly ordeal to a task akin to working with a graphical, object-oriented development tool. By contrast, Ascential’s strength was largely in its ability to move data in and out of mainframe databases. Yet, Ascential’s cash cushion, backed by astute management, provided the company the breathing space to stitch together its products which are far more diverse than Informatica’s.
Four years later, IBM has acquired the portion of Ascential it left behind in the April 2001 Informix deal. It’s a smart move for IBM and Ascential shareholders, who received an 18% premium, and in sharp contrast to IBM’s 2002 fire sale acquisition of Rational (a deal of roughly comparable magnitude). IBM gets a healthy company plus product that fills a clear gap in its data integration portfolio. While IBM has built integration offerings – including business process and integration brokers around WebSphere; collaboration around Lotus; and data federation, content integration, and unified query around DB2 – it’s lacked the ability to handle real-time data staging and integration.
The deal is shouldn’t prove traumatic, given that both already have 4+ years under their belts in joint technology and sales efforts that have yielded roughly 300 joint customers to date. In the short run, the deal should make scant difference to Ascential customers, as there are already multiple integration points with IBM’s DB2 and WebSphere products. It makes more of a difference for IBM, which fills out an obvious gap in its integration portfolio.
It’s rare that we see a deal that’s so logical that we didn’t wonder why it didn’t happen before.