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BPM Firm Tibco Picks Up Spotfire for $195M; Business as Usual for Life Science Customers

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Tibco, a provider of business process management software, announced this week that it is acquiring Spotfire for $195 million in cash in a bid to build out its business-intelligence offering.
 
Tibco executives said they view the financial services sector — a relatively new market for Spotfire — as the first opportunity for the combined firms, but Spotfire officials told BioInform that the company intends to continue its focus on the life science market, which currently makes up around 40 percent of its business.
 
Spotfire will retain its brand and will remain an independent business unit within Tibco, which means that “our focus does not change,” Roger Oberg, chief marketing officer at Spotfire, told BioInform this week. “We continue to market the same way, we sell the same way, we go to the same customers.”
 
Oberg noted that no management or other staffing changes are planned at Spotfire as a result of the acquisition. Christopher Ahlberg, who developed Spotfire’s visualization technology and founded the firm in 1996, will continue to run the business as a subsidiary of Tibco.
 
Tibco has a large customer base in financial services, while Spotfire only began targeting that market aggressively around nine months ago, Oberg said. “One of the things we get from this relationship is access to more customers in the financial services market, but it doesn’t really change our strategy, which is obviously to grow in financial services but to continue to serve the life sciences market,” he said.
 
“We’ll be very careful about how we introduce [Spotfire’s products] into the Tibco distribution channel,” Tibco CEO Vivek Ranadivé said during a conference call to discuss the acquisition this week. “It will be initially in the financial services industry, and based on the success of that, we’ll grow it over time.”
 
Ranadivé and other Tibco officials did not disclose the company’s specific plans for integrating their technologies or expanding into additional vertical markets, but Ranadivé said in response to an analyst’s question that the acquisition presents a “tremendous” opportunity for Tibco to extend its reach into new areas.
 
The life science market could represent a ripe growth opportunity for Tibco, which has established a strong customer base in banking, securities, insurance, manufacturing, telecommunications, and other verticals, but on its website only lists three life-science companies among its clients.
 
By contrast, the much smaller Spotfire lists 22 life-science customers on its website, but only four financial services customers.
 
“We’re strong in financial services and that’s much more of a nascent market for Spotfire,” said Tibco CFO Murray Rode during the call. He said that the firms have several customers in common in “a variety of industries,” but noted that, to date, they have not yet worked together with any joint customers. Oberg told BioInform that one market where the firms have particularly strong overlap is consumer packaged goods.
 
Ahlberg noted during the call that it was Spotfire’s recent move into the financial services market that ultimately brought about the acquisition. “As we’ve been entering into financial services, that’s when we started hearing people tell us that we should be able to hook into the Tibco infrastructure,” he said.
 
Front End, Back End
 
Executives from both firms described the acquisition as the combination of purely complementary technologies, with Spotfire’s analytical tools serving as a front end for Tibco’s middleware offerings.
 
Tibco’s Ranadivé said that Spotfire’s DecisionSite and DXP tools fit into the company’s strategy to develop a software suite to enable “predictive business,” which he described as a shift from “today’s focus on analyzing the past to being able to spot and identify trends as they are emerging.”
 
“Unlike traditional [business intelligence] vendors, such as Hyperion, Spotfire enables a very fluid and dynamic way of accessing, analyzing, and displaying information,” Ranadivé said. “In this way, Spotfire’s free-form way of analyzing information complements and extends Tibco’s flexible platform for [service-oriented architecture] and [business process management].”
 

“One of the things we get from this relationship is access to more customers in the financial services market, but it doesn’t really change our strategy, which is obviously to grow in financial services but to continue to serve the life sciences market.”

Oberg said Tibco’s technology allows IT organizations “to create very flexible information architectures.” Spotfire’s tools, he said, “can be placed on top of this very flexible architecture, and end users and IT can then customize the Spotfire enterprise analytics platform to the needs of different users without having to write custom applications or buy specialized packaged applications.”
 
In a FAQ on its website, Tibco said that the acquisition is “extremely complementary” to its existing offerings, and that it plans to integrate Spotfire’s technology with several of its products, including the iProcess Suite, a business process-management platform that captures data on “process execution and business performance,” and BusinessEvents, an event-processing product that “captures, correlates, and filters events from across an enterprise.”
 
Spotfire’s software will allow users to analyze the data from those tools through its visual user interface, while the Tibco infrastructure “will provide a clear path to execution from the analytics environment,” Ahlberg said.
 
A Growing Business
 
During the call, Tibco officials provided a glimpse of privately held Spotfire’s financial health.
 
The company, which employs around 200 employees worldwide, is “roughly a $40 million to $50 million business and has been growing at around 20 percent to 30 percent annually,” Tibco’s Rode said. 
 
By comparison, Tibco, which is publicly held, employs around 1,600 people worldwide and generated $517.3 million in revenues in 2006.
 
Spotfire is cash-flow positive, Ahlberg said. Tibco expects the acquisition to snip one cent from Tibco’s 2007 non-GAAP earnings per share, and add two cents to its fiscal 2008 non-GAAP EPS.
 
Spotfire will remain an independent subsidiary of Tibco and will retain all employees at its locations in Boston; Göteborg, Sweden; and Tokyo.
 
Ahlberg will continue to lead the Spotfire business and will report to Ranadivé.
 
The acquisition is expected to close during Tibco’s fiscal third quarter, which ends Aug. 31.

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