Borland to Acquire Software Quality Company, Segue Software; Announces Plan to Divest IDE Product Lines; Company Sets Course for
February 08 2006 - 4:00AM
Business Wire
Borland Software Corporation (NASDAQ:BORL) today announced
aggressive plans to drive its Application Lifecycle Management
(ALM) business forward. As part of that plan, Borland has agreed to
buy Segue Software Inc. (NASDAQ:SEGU), the Massachusetts-based
provider of global software quality and testing solutions. In
addition, Borland announced plans to seek a buyer for the portion
of its business associated with the Integrated Development
Environment (IDE), including the award-winning Borland Developer
Studio (Delphi(R), C++Builder(R) and C#Builder(R)) and JBuilder(R)
product lines. Both actions are significant milestones in Borland's
strategy to secure leadership in the growing ALM sector and expand
its ability to offer organizations solutions that make software
delivery a more predictable and manageable business process.
"Segue's quality optimization products and services will add
significantly to our growing portfolio of application lifecycle
management solutions," said Tod Nielsen, Borland president and
chief executive officer. "This is a natural extension of our focus
to expand beyond development and into software delivery, helping
companies increase business value through successful software
initiatives." Nielsen continued: "The decision to expand our
emphasis on ALM, and at the same time enable our IDE business to
get the attention it deserves, enables us to do what's right for
our business, what's right for our customers, and what's right for
the future of software development." Borland and Segue have entered
into a definitive merger agreement in which Borland would acquire
Segue in a one-step merger transaction for $8.67 per share in cash,
and anticipates the transaction to close in the second calendar
quarter. Concurrently with the execution of the merger agreement,
Borland entered into voting agreements with certain significant
Segue shareholders who own an aggregate of 21.5% of Segue's
outstanding shares and who have agreed to support the transaction.
The transaction is valued at approximately $100 million and will be
funded with existing cash on hand. Borland's Solution-Oriented
Approach to Improving Software Delivery Processes Borland's ALM
solutions play a critical role in helping enterprises manage the
complexity of software development and delivery, by providing
business, development and operational teams with increased
visibility and control over all phases of the software lifecycle.
This is especially crucial for large enterprises working within
heterogeneous and distributed environments. IDC forecasts the ALM
market to grow to $3.3 billion in 2009, achieving a 9.2% compound
annual growth rate (CAGR) for 2004-2009(1). Over the past three
years, Borland has built out its ALM portfolio to include products
and services for project and portfolio management, demand
management, requirements management, software configuration and
change management and modeling, among other areas. In 2006, Borland
intends to leverage these assets, its industry-leading process
optimization and educational service offerings, and the expertise
and technology it plans to acquire from Segue, to offer a series of
packaged and personalized solutions that enable customers to
improve the most critical process areas within software delivery.
These areas of focus include: -- IT Management and Governance --
Requirements Definition and Management -- Change Management --
Lifecycle Quality Management By increasing the maturity of these
processes, companies can better manage complexity, while also
mitigating the risk of external pressures such as compliance
mandates, shifting business priorities and industry consolidation.
Borland intends to roll out comprehensive solution offerings for
each of the above mentioned processes throughout 2006. Each
solution offering will be an integrated package of Borland's ALM
technology, process optimization services and skills training, all
tailored to the customers' unique needs and goals. This holistic
and customized approach allows enterprises to more easily align
people, process and technology so they can deliver quality software
with maximum business value. Borland and Segue Team on Lifecycle
Quality Management Segue Software, headquartered in Lexington,
Mass., is an expert in delivering solutions to define, measure,
manage and improve software quality throughout the entire
application lifecycle. Upon completion of this acquisition, Segue
will bring to Borland its comprehensive line of quality
optimization and performance management products, a global team
with deep understanding of the quality and testing space, and a
significant customer base representing a wide range of industries
and Fortune 100 companies. Segue's software quality optimization
solutions and industry expertise will further extend Borland's
leadership in the ALM space, complementing Borland's existing
product set and worldwide service offerings. Segue's
state-of-the-art Silk product line will also play a central role in
Borland's upcoming Lifecycle Quality Management Solution, which
looks to infuse quality throughout the lifecycle, addressing the
root cause of quality problems versus reacting to symptoms later in
the process when they are more costly. Segue's technology will also
be a key element of future versions of Borland's integrated ALM
platform. "Rarely do two companies share such a strong vision for
transforming their industry," said Joseph Krivickas, president and
chief executive officer of Segue Software. "Borland and Segue have
been partners for several years, helping our customers overcome the
challenges that cause project failure and poor software quality. By
bringing together our products and teams, we can help customers
ensure higher standards of quality and service, while
systematically reducing the costs associated with software quality
issues." Borland Initiates Process to Divest IDE Product Lines
While organizations look to ALM solutions to improve team and
organizational productivity, individual developers continue to
demand more feature-rich tools that will help improve their own
productivity. With this in mind, and the knowledge that developers
play a pivotal role in the application lifecycle, Borland has
continued to invest in its industry-leading development tools
business in parallel with its ALM investments. "Developers will
always play an important role in the application lifecycle, but the
ALM and IDE markets are very different -- requiring distinct
business models, different operational and marketing structures and
a focused R&D team," said Nielsen. "Both markets are important,
but Borland can no longer give both the resources and attention
they require. Therefore, Borland has chosen to focus wholly on its
ALM business, while acting in the best interests of the development
community. Our intention is to create a standalone business focused
on advancing individual developer productivity." Borland has
retained Bear, Stearns & Co. Inc. to manage the process of
seeking a buyer for Borland's IDE assets. To learn more about this
announcement, please visit www.borland.com. Borland will hold a
conference call and simultaneous Webcast today to discuss recent
announcements. This will take place on February 8, 2006 at 11:00
a.m. PST. To participate, please dial (866) 249-5225. To access the
live Webcast, please visit the Investor Relations section of
www.borland.com. A replay will be available approximately two hours
after the conference call ends and will be available until February
23, 2006 at 12:00 a.m. PST. Please dial (800) 405-2236 or (303)
590-3000, with passcode 11050769 to access the replay. The archived
Webcast will also be available on Borland's website. About Borland
Founded in 1983, Borland Software Corporation (NASDAQ:BORL) is the
global leader in Software Delivery Optimization. The company
provides the software and services that align the people, processes
and technology required to maximize the business value of software.
To learn more about delivering quality software, on time and within
budget, visit: www.borland.com. Borland, Delphi, C++Builder,
C#Builder, JBuilder and all other Borland brand and product names
are trademarks or registered trademarks of Borland Software
Corporation in the United States and other countries. All other
marks are the property of their respective owners. Safe Harbor
Statement This release contains "forward-looking statements" as
defined under the Federal Securities Laws, including the Private
Securities Litigation Reform Act of 1995 and is subject to the safe
harbors created by such laws. All statements that are not
historical are forward-looking. Such forward-looking statements
include statements regarding Borland's strategic focus, near-term
and long-term outlook, anticipated financial performance in the
coming quarter, benefits and synergies of the proposed acquisition
of Segue Software, Inc., the growth of the ALM market and Borland's
ALM solutions, future product offerings by the combined company and
Borland's plan to seek a buyer of its business dedicated to the
Integrated Developer Environment (IDE) (including the Delphi, C++
Builder, C#Builder and JBuilder product lines). Actual results
could differ materially from those contained in the forward-looking
statements and are based on current expectations that involve a
number of risks and uncertainties, including, but not limited to,
the receipt and timing of regulatory approvals for the proposed
acquisition; the possibility that the acquisition will not close;
the reaction of customers to the acquisition; the reaction by
competitors to the proposed acquisition and the potential for
increased pricing pressure by such competitors; Borland's ability
to successfully integrate Segue's operations and employees; costs
associated with the acquisition and Borland's ability to manage its
expenses following the closing; the Company's reduced cash position
following the acquisition; the results of our exploration of the
sale of Borland's IDE product lines; diversion of management
attention from other business concerns due to the proposed
transactions; undisclosed or unanticipated liabilities and risks
resulting from the proposed transactions; our ability to sell
multi-product solutions for the application development lifecycle;
the effects of a longer sales cycle as we increase our focus on
larger enterprise customers; market acceptance and adoption of our
products and services including our enterprise software development
solutions; our ability to enhance the quality and scalability of
our products to meet the needs of our customers; our ability to
retain key personnel and hire new leaders to support our business
transition; and general industry trends, general economic factors
and capital market conditions. These and other risks may be
detailed from time to time in Borland's periodic reports filed with
the Securities and Exchange Commission, including, but not limited
to its latest Annual Report on Form 10-K, and its latest quarterly
report on Form 10-Q, copies of which may be obtained from
http://www.sec.gov. Borland is under no obligation to (and
expressly disclaims any such obligation to) update or alter its
forward-looking statements whether as a result of new information,
future events or otherwise. Information contained in our website is
not incorporated by reference in, or made part of this press
release. (1) IDC, "Worldwide Application Lifecycle Management Tools
2005-2009 Forecast," March 2005
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