BMC to buy Marimba for US$239 million

Management software maker BMC Software Inc. will spend US$239 million to buy configuration software developer Marimba Inc., the companies announced Thursday.

Marimba’s discovery and provisioning tools will be a good complement for BMC’s Remedy service and support applications, BMC chief executive officer Bob Beauchamp said in a prepared statement. He touted the acquisition as a way to expand BMC’s portfolio and Marimba’s market reach.

BMC paid a significant premium over Marimba’s market price: BMC will pay US$8.25 in cash for shares that ended trading Wednesday on the Nasdaq exchange at US$4.87. Marimba, based in Mountain View, Calif., brings to the merger US$52.9 million in cash and equivalents, leaving BMC with a net purchase price it estimated at around US$187 million. BMC had US$1.2 billion in cash and equivalents on hand as of March 31. Pending approvals from regulators and Marimba’s shareholders, BMC expects the deal to close in its second quarter, which ends Sept. 30.

Gartner Inc. research director Ronni Colville said becoming part of BMC is a positive move for Marimba and should benefit both companies’ customers.

“They needed an exit strategy,” she said. “It’s a struggle to maintain profitability in a really hard market like configuration management. They needed to get really big and grow or they needed to get out.”

Large vendors have been shopping recently in the management software market. Two of Marimba’s rivals, On Technology Corp. and Novadigm Inc., were snapped up by Symantec Corp. and Hewlett-Packard Co., respectively, while IBM Corp. grabbed BMC rival Candle Corp. Marimba will join the Remedy unit BMC picked up in 2002 from Peregrine Systems Inc.’s bankruptcy fire sale. Marimba is located “right across the street” from Remedy’s Mountain View headquarters, Beauchamp said in a conference call with analysts. Marimba brings to Remedy a staff of 170, along with two dozen outsourced engineers and service employees in India.

“We’re going to put the product into what I assure you is a hungry sales force,” Beauchamp said. “Customers are clamoring for change and configuration management tools.”

Adding Marimba’s software to its portfolio brings BMC a step closer to the real-time “on demand” strategy sweeping through vendors’ data-centre road maps, said Gartner’s Colville. BMC calls its version of the vision Business Service Management.

“I think there are a lot of customers looking for vendors to lead with a single strategy around this real-time enterprise idea,” Colville said. “BMC’s big thing is monitoring, but what they don’t do is resource change control. This gives them the active component for management. It could change their persona in a big way.”

Colville said her main concern about the combination is whether BMC will successfully leverage Marimba’s server management tools.

“Remedy is focused on the desktop, but the server code has greater opportunity. It’s an emerging market,” she said. “BMC should absolutely try to harness the server solution Marimba has and grow it.”

BMC and Marimba also both announced Thursday results for the quarter ended March 31. BMC reported earnings of US$36.9 million on revenue of US$400.2 million, up five per cent from last year. Marimba showed a net loss of US$1.2 million on revenue of US$8.3 million, down 19 per cent.

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