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Chordiant Software acquires PrimeResponse

CRM software developer Chordiant Software, Inc. has signed a definitive agreement to acquire Prime Response, Inc., a business-to-consumer (B2C) marketing software company. Together, they will offer Chordiant's unified CRM infrastructure software, service and relationship marketing applications, aimed at the B2C market.

"From a strategic perspective, we envision the combined company offerings, the industry's leading unified CRM infrastructure software and relationship marketing applications, for extreme customer requirements in the B2C market," said Sam Spadafora, chairman and chief executive officer of Chordiant.

Chordiant and PrimeResponse plan to create broad software and services across B2C vertical markets, unifying e-service, e-marketing and e-business functionality for real-time applications. The combined company, which will be called Chordiant, expects to position itself as one of the premier providers of customer acquisition, retention, relationship management and CRM infrastructure software.

"We have a proven product and technology that is working together with joint customers," said Peter Boni, president and CEO of PrimeResponse.

"We plan to enable the largest B2C companies, enterprises the size of AT&T Broadband, GM, MetLife and Lloyds, to manage the complete customer relationship lifecycle, Spadafora said.

Under the agreement, Chordiant would have a customer base that includes customers such as Allianz, AXA, Barclays Mercantile, British Telecom, CIBC, CBS, Deutsche Bank, Direct Line Financial Services, DLJdirect, E-Trade, First USA Bank, OnStar, Halifax Card Services, Lloyds TSB, MetLife,, Principal Financial, Quick & Reilly, The Royal Bank of Scotland, Wachovia and 1-800-Flowers.

"The customer base reflects compelling synergies in vertical markets: financial services, banking communications, travel and consumer across major geographic regions," Spadafora said. "Adding to the market reach, strategic partners and relationships with hardware and software developers will make Chordiant one of the most significant CRM software providers in the industry."

Chordiant will also acquire a global corporate structure, with offices in the U.S. in Cambridge, Mass.; Cupertino, Calif.; Chicago; New York; Lakewood, Colo. and Irving, Texas. The company will also have offices in Europe in London, Paris, Amsterdam, Munich and Frankfurt, and offices in the Asia-Pacific region would be in Melbourne, Sydney and Singapore.

"We look forward to the expansion of global operations as well, resulting in offices throughout the U.S., Europe and Asia-Pacific region," Spadafora added.

The discussions had begun in the middle of 2000, according to Spadafora. Chordiant expects to complete the transaction early in the second quarter of 2001.

"We set out with a goal for ourselves to be at a $100 million run rate, moving into 2001," Spadafora said. When the company realized they couldn't achieve that goal organically, they looked for companies to acquire, preferably close to their "family tree," he said.

"There is no product overlap," Boni said.

The acquisition is valued at approximately $33 million, based on the closing price of Chordiant common stock on January 5, 2001. Under the terms of the agreement, each share of PrimeResponse's common stock would convert into .6 of a share of Chordiant common stock. Chordiant expects to issue approximately 12.3 million new shares of common stock in the transaction and assume options and warrants to acquire approximately 1.5 million more shares. It will be accounted for as a purchase.

The combined revenues and cash balances of the two companies for the three-quarters ended September 30, 2000 were $45.5 million for Chordiant and $98.5 million for PrimeResponse. As of that date, Chordiant had approximately 235 employees, while PrimeResponse had approximately 225 employees. During the first quarter of 2001, PrimeResponse expects to restructure operations to improve operating margins and reduce expenses. This includes a reduction of employee headcount and the closing of several regional offices.

Trading on the Nasdaq stock exchange was up for Chordiant stock on January 10, from $2.625 on January 9 to $2.875 a share.

>b>For more information, visit Chordiant's Web site.

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