SAN JOSE -- Agile Software Corp. here has acquired Digital Market Inc., a Sunnyvale, Calif.-based provider of Internet-based sourcing and procurement tools, for cash and stock worth a total of $109 million.
Agile Software, which develops supply-chain solutions for electronics manufacturers, exchanged 611,000 shares of common stock, plus $20 million in cash, issued and outstanding shares of stock and warrants of Digital Market.
In addition, Agile has assumed all of the unvested outstanding options to purchase Digital Market's common stock under its stock option plans. The acquisition will be accounted for as a purchase business combination.
"This move is the next logical step in our e-commerce strategy, and will deliver another strategic weapon for both our OEMs and electronics manufacturing service EMS providers," said Bryan D. Stolle, chairman and CEO of Agile Software. "We believe that our product content management solutions, coupled with Digital Market's direct materials sourcing, quoting, and ordering applications create a powerful, Internet-based solution for the supply chain."
The combination of Agile's business-to-business products with those of Digital Market will create a direct link from product design and engineering change processes to material procurement, streamlining further the sourcing and purchasing of components, including semiconductors.
Texas Instruments, Philips, Lucent Technologies, NEC, FSI International and others are among Agile's semiconductor customers that use the company's software solutions to define and manage product content. Digital Market counts Jabil Circuit, LG Electronics, Lexmark, and Solectron among its largest users.
"Agile and Digital Market have highly complementary e-supply chain applications," said Bruce Richardson, vice president of research strategy at AMR Research Inc., a Boston-based manufacturing market researcher. "Beyond the potential for cost reductions, the new product introduction process is an obvious area of benefit.
Because components are being designed into new products with limited cost and availability information, Richardson said, they are often specified without kowning the optimal availability, lead time, or cost for the OEM.
Added Scott R. Hammond, CEO at Digital Market, "For example, at a global manufacturer, a buyer at one location may receive different pricing than buyers at other locations, or may not even know another location is purchasing the same parts. There is . . . often no way to aggregate demand."
By integrating Agile's product content information with Digital Market's direct procurement capabilities, OEM and EMS customers will greatly enhance their supply chain processes, Hammond said. "And, because both products are Java based and highly Internet-focused, and both are business-ready applications with rapid deployment cycles, customers and suppliers throughout the supply chain will benefit from this match."