Busy day as NICE bolsters leadership in financial compliance arena and tucks in location based services

On August 31, 2009, NICE Systems announced a $73.5 m all cash acquisition of Fortent analytics based compliance and risk management business. Transaction expected to be accretive in 1Q 2010 is valued at 5x EV/Forward revenue, in line with NICE’s acquisition of Actimize in July 2007. Positions Actimize, wholly owned subsidiary of NICE, to be the one-stop shop for all banks in their compliance and financial crime prevention efforts. Fortent provides analytics based Anti-Money Laundering (AML), Know-Your-Customer (KYC) and other financial crime prevention software for financial services industry

NICE also announced a $11 million Hexagon System Engineering tuck-in which provides cellular location tracking technology for law enforcement, intelligence and security groups. Acquisition enhances security offerings to government agencies, aka homeland security and enhances NICE’s position in communication interception market as highlighted by Israel Digital News

Xora Gearworks combine as mobile software is overcrowded w few carrier partners

On Aug 12^th, Xora announced the acquisition of Gearworks following in the footsteps of Antenna/Dexterra, continuing the consolidation in Enterprise mobility. Phillipe Winthrop spoke with Jim Hemmer, CEO of Antenna, on the consolidating nature of enterprise mobility pure-play vendors and the need for platform vendors to provide robust end-to-end solutions to enterprise customers.

Both Xora and Gearworks partner with wireless carriers to provide location-based field force management tools on mobile devices. The combination creates a larger player to better compete in the crowded Mobile Workforce Applications space as vendors seek the attention of fewer wireless carriers. The transaction also enables Xora to offer customizable apps to its mostly out-of-the-box solutions.

The Xora management team will run the combined entity and the VC backers have agreed to invest $8.5 m which is over the combined $50 m previously invested. Investors include Downtreader, BlueStream, Split Rock and Rho.

VMware enters app development stack w $420 m SpringSource; largest VMW deal yet

On August 10th VMware announced a $420mm cash & stock acquisition of open-source Java development framework vendor SpringSource. The purchase price which marks the largest VMware transaction, includes $331 m in cash, $31 m in stock for vested unexercised SpringSource options and $58 m of unvested SpringSource stock. In addition VMware is setting aside a $60 m stock retention bonus pool.

SpringSource has 150 employees, $20 m in trailing revenues, with cash flow positive expected in 1H 2010 and $25 m in funding from Accel and Benchmark. The premium price, a nice exit for the VCs, represents a 21x EV/TTM Revenue multiple. The premium is justified when you consider the need for VMware to diversify away from its core market and the scarcity of the target. Red Hat's $350 m acquisition of JBoss and Citrix's $500 m acquisition of XenSource serve as examples of platform vendors moving into development and deployment stack and paying a significant premium. The acquisition will also help draw some of the unwanted attention away from the recent ousting of founder-CEO Diane Greene.

VMW plans to use SpringSource to jointly develop Platform-as-a-Service (PaaS) solutions for data centers and for cloud service providers. TechCrunch's Cameron Christoffers highlights the benefit of "lean software" that SpringSource would bring to VMware, enabling faster delivery of business applications in the cloud. For a detailed rationale here is what VMW CTO Steve Herrod and SpringSource CEO Ron Johnson have to say. This acquisition is in line with the consolidation trend highlighted by Oracle's intention to own the entire hardware/software stack with SUN.

A particularly interesting fact about the deal is that no advisors were used in this scant tech M&A environment; a missed $5-$10 m fee opportunity. Dare I say that with all the lay-offs, perhaps there are not enough bankers left to cover the likes of VMware...

Google “on to” more video with acquisition of On2 Technologies

On Aug 5, 2009, Google announced its acquisition of video-compression software maker, On2 Technologies , for $106.5 million in stock. The deal value represents a 58% premium to prior day’s close and represents a 6x Enterprise Value to LTM Revenue multiple.

With the acquisition, Google is expecting On2's technology to advance its efforts of increasing the amount and quality of the video it brings to consumers either via its YouTube video-sharing site, it's new mobile-device operating system, Android, or other ways to bring video over the Internet to consumers.

Google continues to expand into other non-search related businesses such as operating systems, mobile and video, positioning itself squarely against the likes of Microsoft and Apple. Eric Schmidt’s resignation from Apple’s board tops the latest signs that Google wants to be the enabler and the hub of the digital infotainment lifestyle.