Feeds

On Hummingbird's takeover tussle

Symphony or Open Text?

5 things you didn’t know about cloud backup

Comment Open Text Corporation initially announced its intention on 5th July 2006 to make a counter bid for all of the shares of Hummingbird Ltd. at a price of US$27.75 per share in cash following the announcement on 26 May 2006 that Hummingbird would be acquired by a company within the Symphony Technology Group. Open Text offered $1.00 per share more than Symphony Technology Group. Since then, on 21st July, it has had to increase the cash offer by 10 cents (to $27.85) per share to get Hummingbird to the negotiating table.

The counter bid should be a cause for concern for Hummingbird customers especially those using its Connectivity and Business Intelligence (BI) products.

This is not the first time that Open Text has considered the acquisition of Hummingbird technology. There were alleged rumours of a bid several years ago but nothing transpired then. Hummingbird has since become an established player in the Enterprise Content Management (ECM) marketplace now with "strong double digit growth for the third consecutive year" with more than 70 per cent of its total revenue base coming from this market.

The ECM market is rapidly consolidating and appears to be repeating the pattern of other markets such as BI, ERP and database systems. Smaller innovative vendors are merging or are being acquired by larger ones and the giants of the IT industry such as Microsoft, Oracle, IBM and SAP, have entered the market and are beginning to exert their influence.

Both Open Text and Hummingbird have had their share of acquisitions in the past few years but are not yet large enough to feel unthreatened by the likes of Microsoft and Oracle even though both have strategic partnerships with them. Both are trying to reduce the threat—Open Text by planning to acquire a major competitor and increase its market share and Hummingbird by planning to merge with a private company with a record of investments in technology companies.

Whilst there may be some synergies between Hummingbird and Open Text, there is a lot of overlap in their ECM technology and solutions. Many Hummingbird customers may have evaluated competing technology, including Open Text, for their ECM needs. Will they be forced to choose technology they may have rejected before? What will be the future for Hummingbird's BI and Connectivity customers? Open Text is focussed on the ECM market. Will it maintain the BI and Connectivity product lines? These are just some of the questions customers should ask their Hummingbird sales representatives.

In the same vein, Open Text customers should also be concerned about the impact of competing ECM technology from their vendor and the longer term plans for product enhancements.

Whilst the BI technology can be incorporated into a wider information management scenario, the connectivity products do not fit easily into such a scenario. The connectivity business is mature and generates a good deal of cash. Additionally, as these are the foundation products of Hummingbird, for the chairman and the president & CEO, who are still at the helm, there are probably sentimental reasons for maintaining this as a separate line. Without the same motivation from the management of Open Text the connectivity products may not have the same level of investment as now and could well be divested.

Areas of differentiation between the companies are in the areas of expertise in vertical industry sectors. Hummingbird appears to be stronger in Legal, Government and Financial Services sectors whilst Open Text has its strengths in Energy, Pharmaceuticals, and Financial Services. The merging of the two companies on these grounds would make sense. However, if Open Text's recent problems of integrating IXOS are anything to go by, the benefits of increased market share would be negated by the administration task of integration and could prove to be damaging to both Open Text and Hummingbird.

Symphony Technology Group, meanwhile, is a holding group that invests and operates technology companies. Hummingbird would be another one of its investments that include companies such as Lawson Software—mid market ERP supplier; IRI—provider of enterprise market information for the consumer packaged goods, Retail and Healthcare industries; ImmediateFx—integrated analytics platform; Symphony RPM—business performance management platform and solutions and Symphony Services—business services outsourcing.

There is no information available yet as to what Symphony plans to do with Hummingbird, but given Symphony's track record, Hummingbird would probably continue as now but under a new Symphony management team with little significant change for customers. There would be better synergies with the other companies in the Symphony stable. Complementary technologies such as an analytics platform and business process management as well as access to business services will broaden the scope of the Hummingbird offering. The other Symphony companies would also benefit from Hummingbird technologies.

Under the current circumstances, Hummingbird customers would be better served by the Symphony takeover than if Open Text were to win its bid.

Copyright © 2006, IT-Analysis.com

Secure remote control for conventional and virtual desktops

More from The Register

next story
Why has the web gone to hell? Market chaos and HUMAN NATURE
Tim Berners-Lee isn't happy, but we should be
Linux turns 23 and Linus Torvalds celebrates as only he can
No, not with swearing, but by controlling the release cycle
Apple promises to lift Curse of the Drained iPhone 5 Battery
Have you tried turning it off and...? Never mind, here's a replacement
Sin COS to tan Windows? Chinese operating system to debut in autumn – report
Development alliance working on desktop, mobe software
Microsoft boots 1,500 dodgy apps from the Windows Store
DEVELOPERS! DEVELOPERS! DEVELOPERS! Naughty, misleading developers!
Eat up Martha! Microsoft slings handwriting recog into OneNote on Android
Freehand input on non-Windows kit for the first time
This is how I set about making a fortune with my own startup
Would you leave your well-paid job to chase your dream?
prev story

Whitepapers

A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.