Critical Path acquires PeerLogic in US$400-million deal

E-mail outsourcing giant Critical Path Inc. continues its acquisition streak with Tuesday’s purchase of PeerLogic Inc., a directory services firm specializing in security services.

The US$400 million all-stock transaction is scheduled to close in the third quarter. Both companies are based in San Francisco.

Critical Path offers a wide range of outsourced messaging services including hosted Microsoft Exchange, Web mail, integrated fax and security services. PeerLogic is the ninth company that Critical Path has acquired since June 1999, and its second acquisition in the directory arena following the purchase of Isocor in January 2000.

PeerLogic sells LiveContent Directory, an LDAP directory system for messaging, security, public key infrastructure and corporate information requirements. Critical Path previously had a licensing arrangement with PeerLogic, and the two companies share several customers including Sony Pictures, PricewaterhouseCoopers and Britain’s Royal Mail.

Now Critical Path plans to fully integrate PeerLogic’s LiveContent Directory with its own InJoin Directory Server and InJoin Meta-Directory engine to provide a full suite of directory services to large corporations.

“Typically, large companies have hundreds of directories, everything from the HR directory to the Outlook directory to the payroll directory. When they bring a new employee into the company, they have to populate all these directories because these silos don’t talk to each other,” explained Doug Hickey, CEO of Critical Path. “Meta directories provide the ability to key in the information once and have it populate all these directories.”

Hickey said that what PeerLogic adds is the ability to integrate directories for public keys and digital certificates. “There are disparate digital certificate products. In order for the person using Entrust to talk to the person using Verisign or to the person using Baltimore, you need something in the middle,” Hickey said. “We’re now able to be the trusted clearinghouse for those types of services … to provide authentication and identification on a real-time basis.”

Hickey didn’t dismiss the idea of Critical Path making additional acquisitions this year, but he admitted that the company’s dealmaking is slowing down. “We are firmly committed to delivering profitability in the fourth quarter of this year,” he said.

Critical Path is expected to post $140 million in revenues in 2000, more than double its revenues in 1999 and up dramatically from its 1998 revenues of under $1 million.