Siebel Acquires Edocs To Boost Front-Office Offerings

Siebel Systems Inc. has agreed to buy E-billing and customer-self-service software vendor edocs Inc. for $115 million in cash in a deal Siebel says will advance its strategy of addressing increasing customer demand for better integration of front-office applications. Siebel also agreed to make additional payments in 2006 if agreed-upon revenue milestones are met.

During a conference call with analysts Friday, CEO Mike Lawrie cited Gartner research indicating that the market for E-billing and customer self-service is valued at $3 billion, representing a sizeable opportunity for Siebel. Lawrie said the edocs acquisition gives Siebel a leg up on its competitors, who he maintained offer few, if any, customer-self-service products. He said Siebel would work on integrating edocs' products into Siebel's core CRM platform immediately and that the result should help customers improve customer service while reducing operational costs.

Lawrie also said that while Siebel is working on developing front-office applications, other acquisitions could follow if they offer a faster route to market. "We're always looking for potential acquisitions to fill that portfolio out," he said.

Edocs' strength in the health-care, insurance, financial-services, and telecommunications verticals will help Siebel build its market presence in those industries, Lawrie said. Edocs CEO Kevin Laracey estimated that about 20% of his company's 116 customers are also Siebel customers. Edocs' customer roster includes British Telecom, Cingular Wireless, GE Retail Finance, and Harvard Pilgrim Healthcare.

The deal, which is subject to customer shareholder and regulatory approvals, is expected to close in the first quarter of 2005. The transaction will result in a one-time charge of $8 million to $10 million that could reduce Siebel's first-quarter earnings by 1 cent a share, Lawrie said, but that the deal is likely to have little impact on revenue the remainder of the year.

In other CRM news, Witness Systems Inc., which makes software for capturing contact center calls, has agreed to acquire workforce-management software vendor Blue Pumpkin Software Inc. for $75 million. Witness will pay $40 million in cash and will issue between 2.1 million and 2.4 million shares of its stock, and the deal is expected to close in the first quarter of 2005. The company expects the acquisition to boost its 2005 revenue by about $28 million, to a range of $176 million to $180 million.