Netmanage is to acquire FTP Software for $77.5 million in stock, combining two companies that hope to escape their terminal emulation roots on the back of the remote access boom.
The merged product range will offer PC connectivity to four host platforms - Unix, AS/400, Digital VMS and IBM mainframe. It brings together two heavily overlapping ranges that connect MS-Dos or Windows PCs to the host platforms. FTP also offers central network management utilities and Netmanage provides support tools.
Although both companies have attempted to expand their host connectivity ranges into remote access and Internet areas, analysts believe they are still essentially in a declining emulation market. "The deal consolidates two installed bases but it doesn't take either of them into a growth area," said Tim Sloane of the Aberdeen Group.
FTP has seemed a likely takeover target for at least a year. It has struggled financially to adapt its strategy to the changing connectivity market, but it has an attractive range of technologies. Many of these are the result of a string of acquisitions of companies with more voguish products than its own TCP/IP host-client core software.
Its revenue has been in steady decline for the past year despite a major restructuring in 1997, and it posted a $3.8 million loss last quarter.
Netmanage will issue 0.73 of a share for each FTP stock, giving FTP shareholders a 14 per cent premium at current stock market prices.
In contrast to its prey, Netmanage's financial fortunes have been upwards in the past two quarters, which have seen profits after a string of losses. It has also scored some major wins for its remote access software, which Intel will use in its videoconferencing range. However, for fiscal 1997, it made a loss of $33.8 million on revenues of $61.8 million.
Like FTP, it underwent a reorganisation last year to focus on growth businesses, notably remote access to the Internet and corporate servers. It has also been on the acquisition trail, its most recent buy being Netvision.
Among the companies FTP has bought recently are Firefox, Campbell Services and NCD's Mariner Internet software unit.
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