Hoping to expand its customer base while also enhancing the so-called front office services it already provides, Siebel Systems said it will buy e-billing service provider eDocs in a deal worth US$115 million.
Siebel will take control of Natick, Massachusetts-based eDoc’s 180 employees and gain access to its 116 customers, most of which are mid- to large-sized companies. eDocs customers include Verizon Wireless, the financing arm of Toyota and Harvard Pilgrim Health Care.
EDocs’ products focus heavily on reducing the flow of paper in a company and in using the Web, e-mail and other applications to encourage customers to choose self-service options whenever possible. Siebel offers its own suite of self-service applications.
Additional Payments Possible
The all-cash deal is expected to close in the first quarter of 2005, assuming it passes regulatory muster. Siebel said the purchase would add a penny per share to its earnings for the first quarter. Additional payments beyond the original $115 million are possible if targets are met.
Siebel cited market research data that shows the e-billing and self-service applications market to be worth $3 billion annually.
Siebel CEO J. Michael Lawrie said customers are eager for more self-service applications that help “increase the efficiency of their service and billing channels, reduce call center costs and enhance customer satisfaction and retention.
“The complementary strengths of Siebel and eDocs will help companies capitalize on the dramatic growth in the popularity of customer self-service interactions,” Lawrie added.
Siebel stock was up a fraction of a percent in midday trading today to $9.99 per share.
M&A Mania
The merger is just one of a slew that have been announced this week, with everyone from eBay to Johnson & Johnson, Oracle to Symantec in on the acquisition action.
Siebel spokesperson Cecilia Denny said Siebel would benefit from “eDocs’ established reputation and customer relationships in the self-service market. Over time, product integration will occur as sought by the two companies’ customer bases. “
She added, “Our solutions are highly complementary.”
Denny said eDoc’s employee base was a key driver behind the acquisition, but added that the company would “take the necessary steps to ensure an optimal business model.”
Demanding on Demand
The acquisition comes as analysts are still debating the wisdom of Siebel’s decision to move on what it sees as an emerging business opportunity in the form of smaller and mid-sized corporations.
Siebel has begun to roll out what will be a menu of Web-based and on-demand products designed to appeal to that more cost-conscious market segment.
Yankee Group analyst Sheryl Kingstone said Siebel might be seen by some as following in Salesforce.com’s footsteps in that hosted software arena.
“Everyone who takes a stab at that market segment is going to be compared to Salesforce,” she said. However, she added that Siebel has a leg up over most rivals in the form of extensive relationships with existing customers and a recognizable name in the industry.
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