Documentum Inc. announced late Thursday plans to acquire collaboration software developer eRoom Technology Inc., solidifying the bonds between the two companies.
The cash-stock deal is valued at around $125 million.
The companies had been working together to offer integration between their respective applications, Documentums enterprise content management software and eRooms team collaboration software. The acquisition will allow them to accelerate delivery of integrated products, Documentum officials said.
"The union with eRoom will help us to manage collaboration content," said Documentum president and CEO Dave DeWalt. "Theres a lot of knowledge gathered through the collaboration process."
DeWalt also noted that collaboration was increasingly becoming a pervasive application, seen in other applications like portals and CRM (customer relationship management).
"This acquisition complements a lot of the collaboration strategies Documentum has been laying out in the marketplace with our iTeam [now Documentum Collaboration Edition] product," he said. "Were hoping to leverage the best of iTeam into the eRoom technologies."
The deal calls for Documentum to issue approximately 7.7 million shares of its common stock and pay approximately $12.6 million in cash for all of the outstanding shares of eRooms capital stock, based upon eRooms current capitalization. In addition, Documentum will reserve approximately 1.7 million shares of its common stock for issuance upon exercise of eRoom stock options being assumed in the acquisition, officials said.
The acquisition is expected to close in December at which time eRoom, based in Cambridge, Mass., will become a separate business unit of Pleasanton, Calif.-based Documentum. eRoom President and CEO Jeffrey Beir will head up the unit as executive vice president for collaboration. Beir said in a statement that the acquisition would help eRoom to expand its market presence.
"We believe that together eRoom and Documentum will offer our target markets a compelling combination of collaboration and content management, a requirement we are hearing consistently from customers and prospects," Beir said.
Privately-held eRoom had more than 1,000 customers and was both profitable and cash positive, eRoom officials said.