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Software AG is buying webMethods in a $546m market expansion deal colored by strong overlap between the companies' SOA software products.

Germany-based business integration specialist Software AG said Thursday morning it will purchase webMethods for $9.15 per share in cash. Wall St greeted the news by bumping webMethods' shares up 26 per cent to $9.17 in mid-morning trading.

Software AG bragged that the deal will more than double its North American customer base. webMethods, which has 826 employees, has 1,500 customers including Wells Fargo Bank and Motorola.

Importantly for Software AG, webMethods unlocks customers in financial services, manufacturing and the public sector, with applications also for SAP and compliance.

"Combining our product portfolio and sales team with those of webMethods gives us a major foothold in the critical North American market," Software AG chief executive Karl-Heinz Streibich said in a statement.

While the deal was positioned positively with all the usual talk of portfolio synergies, the fact cannot be escaped these are two companies with overlapping software jointly feeding the Service Oriented Architecture (SOA) machine.

Both offer integration capabilities, registries, and business process monitoring and management, meaning Software AG must now either fall back on some clever marketing for product differentiation or comb through the portfolio's capabilities with a view to integrating on a features basis or dumping whole products.

Two things are certain. The deal will be seen as proof of the much-talked about consolidation in enterprise software. Also, expect rivals like IBM to muck in with some dirty marketing intended to lure customers away from an uncertain Software AG product roadmap.®

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