RALEIGH … Application development software provider TogetherSoft will acquire the customer base, web content and all but one product from San Jose, Calif.-based WebGain in a move that will more than double its market share.
The product acquisition for TogetherSoft consists of WebGain Studio, which includes VisualCafÃ©, StructureBuilder, Business Designer and Quality Analyzer and provides support for BEA System’s WebLogic Server. While TogetherSoft counts BEA among its strategic partners and its products support BEA servers, company officials say the relationship was not the impetus behind its acquisition of WebGain’s assets.
“This will certainly strengthen our relationship with BEA,” says Shawn Ramsey-Kroboth, TogetherSoft’s director of public relations. “But that was not our primary intent.”
Rather, the driving force behind the deal, according to Ramsey-Kroboth, was the opportunity for TogetherSoft to more than double its market share. Before the transaction, she says WebGain had 15 to 20 percent of the market, whereas TogetherSoft had only around 10 percent.
Now, Raleigh-based TogetherSoft can stake claim to at least 25 percent of the market, if not more.
“It definitely positions us as a much more formidable player in our arena,” says Ramsey-Kroboth. “We’ve had conversations with key analysts, and they’ve said it gives us the opportunity to be in the top five in our space and positions us more aggressively against players such as Borland.”
WebGain customers to gain the most
As part of the proposed agreement, TogetherSoft intends to take over full support for current WebGain Studio customers. TogetherSoft also will provide an integration package, offering WebGain Studio customers the opportunity to migrate to TogetherSoft’s application development environment.
Additionally, customers will be directed from WebGain’s website to the TogetherSoft home page for continued support and maintenance, in addition to upgrade options.
Neither company disclosed financial details of the deal.
“Upon completion of TogetherSoft’s proposed acquisition of WebGain Studio, WebGain’s customers will be able to maximize their application development investment while experiencing a level of stability that can only be provided by an industry leader like TogetherSoft,” WebGain Chief Executive Robert Melendres said in a statement. “TogetherSoft is in the best position to move WebGain’s current customers forward and provide them with more advanced application development opportunities in the future.”
As for WebGain itself, the company will continue to exist, but industry speculation is that it will eventually shut down. That scenario only seems more likely after TogetherSoft’s acquisition of WebGain Studio.
“It’s really the WebGain customers that are the biggest winners,” says Ramsey-Kroboth. “They’ve (WebGain) been struggling and in the process of closing their doors, so the customer has been left in the lurch.”
No immediate changes in Raleigh
While TogetherSoft gained product and customer rights to WebGain’s technology, the company did not hire any of its employees. For the immediate future, the potential for a revenue increase from the added market share appears to be the only likely change.
“We’ve been looking for an opportunity to expand our market share, and this was one that came up and moved pretty fast,” Ramsey-Kroboth says. “We did not acquire any employees as part of this acquisition, but we may decide because of this that we need to acquire more resources, but that has yet to be determined.”
She added that TogetherSoft recently made some layoffs in an effort to be fiscally responsible and streamline its operations. Currently, the company employs 80 people in Raleigh and an additional 300 in offices around the world.
The decision to hire more employees may hinge on whether or not TogetherSoft opts to continue developing WebGain Studio. But for the time being, WebGain customers have nothing to worry about, as TogetherSoft expands its product offering.
“This acquisition provides a sensible cost-effective solution to sustain WebGain customers and their current development initiatives,” TogetherSoft Chief Financial Officer John Sherbin said in a statement. “Given our strategic integration and partnership with BEA, TogetherSoft welcomes WebGain customers to benefit from the compatible technologies, and we are confident that the addition of WebGain Studio to TogetherSoft’s solutions will be a win for our joint customer base and the market overall.”