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Update: Pitney Bowes to buy Firstlogic

Pitney Bowes expanded its presence in the data quality market by acquiring Firstlogic, shrinking the number of pure-play vendors and vendor options.

Pitney Bowes Inc. plans to acquire the remaining shares of Firstlogic Inc. for approximately $50.3 million, strengthening its presence in the data quality market.

Stamford, Conn.-based Pitney Bowes, a maker of integrated mail and document management systems, currently has a 10% ownership stake in Firstlogic, based in La Crosse, Wis. Firstlogic will become a subsidiary of Pitney Bowes in its document messaging technologies division.

The acquisition complements Pitney Bowes' purchase of Group 1 Software last year by bringing Firstlogic's relationships with systems integrators and enterprise software vendors, and its distribution network to the Pitney Bowes portfolio, according to Michael J. Critelli, chairman and CEO of Pitney Bowes.

"Firstlogic has done a great job in establishing [OEM] relationships in the [extract, transform and load] tools market with Informatica and in the [business intelligence] tools space with Business Objects," said Ted Friedman, research vice president with Stamford, Conn.-based Gartner Inc. "These are things Pitney Bowes did not have."

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However, the Firstlogic technology essentially overlaps the technology from the Group 1 acquisition, Friedman said.

In an e-mail alert sent out after the announcement, Aaron Zornes, chief research officer for the Burlingame, Calif.-based CDI Institute, wrote that Pitney Bowes purchased Firstlogic to round out the address cleansing technology it acquired from Group 1. He expects the company to sell off Firstlogic's matching technology to another vendor such as IBM, Informatica or Oracle Corp.

For buyers of data quality technology, the move means fewer options.

"Firstlogic was the largest of the remaining standalone, pure-play data quality vendors," Friedman said. "Now you have a large number of large vendors that dabble in data quality as a small piece of their business along with IBM and its acquisition of Ascential, and Harte-Hanks, which owns Trillium. Any of the pure-play that are still out there are tiny, tiny guys, below $20 million and smaller."

The market volatility looks likely to increase as application vendors like San Mateo, Calif.-based Siebel Systems Inc., Germany's SAP AG or infrastructure companies like Oracle, IBM and Microsoft make acquisitions.

Companies thinking of investing in data quality technology should take a vendor's viability into account, Friedman warned. Buyers should also look at firms that think about data quality more innovatively. Some of the newer, smaller vendors approach data quality beyond just customer data and have done a good job of blending both data profiling and data cleansing tools into one product, Friedman said.

Privately held Firstlogic employs about 400 people and generated more than $55 million in revenue last year.

The deal is expected to close in the third quarter of this year, pending regulatory approval.

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