February 21, 1997 1:00 PM PST
Open Market draws in Folio
The company today agreed to acquire text management software firm Folio, marking its second acquisition this month.
Open Market will purchase all of Folio, a subsidiary of Reed Elsevier, for $45 million in cash and equity. In return, Reed will own about five percent of Open Market, according to Open Market executives.
"The strategic relationship is more important than a straight cash deal," said Open Market chairman and cofounder Shikhar Ghosh in a conference call today. "We expect to see short-term visible results with little disruption to the running of both businesses."
The company expects to take a one-time charge when the deal closes later this quarter. It also expects lingering financial effects into 1998, according to chief financial officer Regina Sommer.
Cambridge, Massachusetts-based Open Market will retain Folio's 190 employees, who will remain at the company's Provo, Utah, headquarters. Folio will operate as a division of Open Market under Folio president Bill Bennett.
Open Market will combine Folio's text management software with its e-commerce transaction management package to provide new products for companies selling information-based services.
The merger should result in products that mesh Open Market's back-end transaction management and security with Folio's information databases, front-end management, and search-retrieval software. Products featuring the combined technologies should come to market by the end of June.
Open Market plans to target the high-volume, business-to-business transaction systems market with these new products. "It's where the money is and that's why we've focused on it," president and CEO of Open Market Gary Eichhorn said.
The companies have already completed a demonstration version of an integrated commercial publishing system and have posted the demo to Open Market's Web site.
The acquisition is expected to be completed later this quarter and is the second this month for Open Market. On February 5, the company signed an agreement to acquire Waypoint Software for $12 million. Waypoint sells a software package for creating Internet-based business-to-business catalogs by retrieving complex product information from databases.