Application server software company Citrix Systems Inc. is moving to extend its product line to include Web content and applications by agreeing to acquire portal company Sequoia Software Corp. for $184.6 million in cash. Sequoia is the maker of XPS portal software, an XML-based middleware product that will let Citrix's application servers better integrate with the Web.

"We view the portal server as a core building block in our applications services platform," Citrix president Mark Templeton said in a conference call. "This acquisition will allow us to include Web applications, Web content, and Web services."

Mark Perutz, an analyst with Robertson Stephens, says the acquisition is a good move. "There is a trend toward portals at the enterprise level," he says, and by using Sequoia's XML technology, Citrix will be able to provide customers with an interface they're accustomed to. "People feel like it just makes a lot more sense to aggregate all your information that way."

The boards of both companies and a majority of Sequoia's shareholders have already approved the acquisition, which remains subject to regulatory approval. Citrix says the purchase, which should close in the second quarter, will lower 2001 earnings, but Perutz says that shouldn't cause concern. "This is a good area to get in to, and I think there's going to be an eventual benefit." He says this deal is one that other companies might look to copy. "I would expect to see some more [merger and acquisition] activity in the portal sector."