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Ariba rebounds on Agile venture after buyout falls through

B2B provider Ariba is set to announce a new partnership with supply chain software group Agile, despite last week's cancelled merger.
Written by Sonya Rabbitte, Contributor

B2B provider Ariba is set to announce a new partnership with supply chain software group Agile, despite last week's cancelled merger.

But some industry analysts are hailing the move as a last ditch survival tactic. Speaking to silicon.com, Ariba's European marketing director, Steve Muddiman, said that Agile will continue to play an integral role in Ariba's strategy for 2001. Referring to the cancelled merger, he said: "This doesn't mean our value chain management strategy is off. Agile is still a part of that strategy and we will continue to partner with them. But it is premature to announce what form it will take." While he refused to reveal any details of the new agreement, he did stress that a new deal was critical to Ariba's continued success, and was likely to be announced sooner rather than later. "Agile brings a lot of capability to the table. It is crucial a partnership is carved out here," he said. While both companies have attributed the failed merger to poor economic conditions, there is speculation among some analysts that Agile was unhappy with a change made to Ariba's accounting method and pushed to terminate the merger. Just a day after the cancelled merger, Agile's board of directors voted on a new stock preference plan. While no reference was made to the Ariba deal, a statement on the company website describes the new plan as "a safeguard against any potential use of takeover tactics designed to gain control of Agile without paying all stockholders full and fair value." Agile could not be reached for comment on this. There is also speculation among industry figures that Ariba could be targeted in a takeover bid as its stock value plunges. Kelly Murphy, CEO of B2B outfit Marrakech, said that Ariba could no longer count on expanding through acquisition. "Ariba are just not worth $2.55bn anymore. If they were to ever look to be acquired this would be a good time for it. They would provide good brand recognition for some big ERP vendor," he said. Eduardo Gonzales, research analyst with Frost & Sullivan, claimed that the partnership was a knee-jerk reaction by Ariba that might not have long-term sustainability. "What could Ariba do? Say we're not going to provide our value chain management strategy or continue with the partnership. It is less shocking for them to announce the partnership." He added: "It saves them from total disaster, but takeover by an ERP vendor is still a possibility"
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