Merant to acquire NetObjects division

To bolster its web content management offerings, Merant plc. last week inked a deal to acquire the enterprise division of NetObjects Inc. for $18 million in cash.

Merant previously focused on change management software and application code management. The deal will expand the companys capabilities to include Web content management, enabling Merant to provide customers with a single vendor to manage everything from code to content, company officials said.

The move was designed to pare down NetObjects focus on the enterprise and small-business markets. It will also give the company, which is not yet profitable, an infusion of cash.

Merant has been dabbling in content management for about 18 months, CEO Gary Greenfield said. “With NetObjects, weve moved into content management in a major way,” Greenfield said.

The deal, expected to close in March, is subject to approval by NetObjects shareholders.

The “announcement is about having from a single vendor a combination of application code management with content management,” said Greenfield, in Rockville, Md. He said there was significant customer demand for a combined solution.

The 40 workers in NetObjects enterprise division—about a third of the companys work force—will become Merant employees.

NetObjects chairman and CEO, Samir Arora, said the sale will address several issues. The company can narrow its focus, while the infusion of cash will provide operating funds without it needing to resort to other measures. Last year, the company decided it had to pick between its enterprise and its small-business and online services divisions.

“What we found as the Web progressed was the two segments became distinctly different,” said Arora, in Redwood City, Calif.

NetObjects hired Broadview International LLC to sell its enterprise division.

Arora said Merant is a good home for the division.

He said the company opted to go with the small-business focus because that was its initial market and because it is a large market that is less expensive to compete in than the enterprise space.

The companys Web site building product, called Fusion, which remains with NetObjects, has been used to build an estimated 4 million sites, according to the company.

NetObjects also is moving into the online services arena, selling its products in conjunction with partners like hardware vendors, Internet service providers, hosting providers, and small- business service providers and vendors.

“Weve seen a real transition occur in the software industry. The sub-$100 products are all turning into online services or hosted versions,” Arora said. To go along with its new direction, NetObjects has launched a product line called Matrix to provide hosted services.