Software AG continued on its dynamic growth path in the second quarter of 2007 thanks to further organic growth and the takeover of U.S. firm webMethods, Inc.
As previously announced, we acquired webMethods as of May 25, 2007. At a deal value of €417 million (USD 560 million) (including ancillary acquisition costs), the acquisition is one of the largest transactions in the history of the European IT industry. webMethods, Inc., a U.S. software firm, is a leading supplier of software for integrating and optimizing business processes. The acquisition has created a new, globally leading provider of infrastructure software for business processes with more than 4,000 enterprise customers worldwide. This makes Software AG one of the biggest independent suppliers in two growth markets at once: Service-Oriented Architecture (SOA) and business process management (BPM).
Software AG customers will benefit from numerous advantages ensuing from the acquisition. Our global product portfolio has been considerably enhanced, our services expanded, and our financial strength increased. In the future, Software AG will use the wellestablished brand name “webMethods” to refer to the joint range of integration products. In addition, the corporate merger will allow us to double revenues in the integration business. This will lead to a balanced distribution of revenue between the newly named webMethods business line and our Enterprise Transaction Systems (ETS) business line.
The integration of webMethods, Inc. into Software AG is proceeding according to plan, and in some instances even faster than planned. webMethods has already been delisted from the stock exchange, and all administrative departments were merged as of July 1, 2007. In addition, we have started integrating the R&D divisions as well as sales and marketing. The first integrated product will be available for sale in the first quarter of 2008. We expect the merger to bring cost savings of up to USD 50 million per year, above all based on process optimization and efficiency increases in general administrative activities. The synergy effects will amount to approximately USD 15 million in 2007.
Capital expenditure for research and development as well as for expanding our high-performance sales team and enhancing customer relations will remain continuously high.
Together with SPL Software and webMethods, Inc., we closed more than 200 new business transactions in the second quarter of 2007. This testifies to the outstanding quality of our products. Our customers have also responded positively to the merger, and we have received the first orders for products from both companies.