Cephren, Bidcom Agree To Merge - InformationWeek

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Cephren, Bidcom Agree To Merge

Marking a trend of consolidation among business-to-business marketplaces, Cephren Inc. and Bidcom Inc., two leading Internet ventures in the construction industry, agreed to merge Tuesday. The companies hope their combined size and resources will set them apart from hundreds of other players in a highly fragmented market. The new company, called Citadon, will have a portfolio of 1,200 projects and 30,000 subscribers among clients that include American Airlines, the Fluor Daniels unit of Fluor Corp., and Bechtel Group.

Both Bidcom and Cephren offer hosted project-management applications that help owners, developers, general contractors, architects, and subcontractors keep track of projects via the Web. Their systems coordinate the processes and procedures common to most construction projects, including requests for information, bids on projects, schedules, change orders, and daily contractor reports.

By joining forces, the companies hope to accelerate product development and strengthen their foothold in the engineering and building industry. Citadon's most well-heeled rival is Buzzsaw.com, an Autodesk Inc. spin-off, whose engineering software is widely used to design buildings. It has $75 million in venture funding. Cephren has raised more than $60 million since inception, and Bidcom had raised $46 million in January. The construction market has spawned more than 200 construction-industry ventures, but has proven a tough market to crack because the construction business is highly localized and fragmented and not highly automated. "It's simply a case of being able to put their resources together so they have enough cash until they reach a critical mass," says AMR Research analyst Leif Eriksen. "Neither is doing enough business today to support their current burn rate."

Bidcom CEO Doug Sabella will become CEO of the new company and Cephren CEO Rob Majteles will become chairman. About 100 employees are expected to lose their jobs in the merger, leaving 200 employees at the new company.

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