Peregrine to Acquire Rival Remedy
Rapidly expanding Peregrine Systems Inc. said Monday that it plans to buy rival Remedy Corp. in a deal that would unite two leading makers of software that helps companies identify and fix problems in their computer networks.
San Diego-based Peregrine would pay $275 million in cash and 27.9 million shares for Mountain View, Calif.-based Remedy.
The sales price totaled $1.1 billion when the deal was announced Monday, but the value slid after investors dumped Peregrine’s stock on news of the sale. Peregrine fell $3.30, or 11.5%, to $25.51 on Nasdaq.
Remedy’s recently slumping stock soared $12.18, or 66%, to $30.52, also on Nasdaq. The deal, which would give Remedy owners $9 cash and 0.9065 Peregrine share for each Remedy share owned, valued the stock at about $32.
The deal continues a yearlong shopping spree by Peregrine. Since June 2000, Peregrine has paid $1.76 billion in cash and stock to buy Harbinger Corp., Loran Network Holding Corp. and Tivoli Service Desk.
Several hundred workers are expected to lose their jobs as management jettisons overlapping operations in an effort to save $40 million to $50 million annually.
Peregrine employs 3,000 and Remedy has 1,300. Although the companies didn’t specify how many layoffs would occur, analyst Patrick E. Mason of Wit Soundview predicted that the combined work force would be cut by 7% to 10%.
“We will take the very best [workers] that we can from each organization,” Peregrine Chief Executive Steve Gardner said during a conference call with analysts.
Combined, the companies expect to generate annual revenue of more than $1 billion. Peregrine revenue totaled $565 million in its most recent fiscal year ending in March, while Remedy reported sales of $288.5 million last year.
The marriage would meld Peregrine’s strength selling to large corporations with Remedy’s focus on small to mid-size businesses.
Because it targets smaller businesses, Remedy has been harder hit by the dot-com downturn than Peregrine. After losing $6.2 million in the first quarter Remedy laid off 7% of its workers.
