i2 in stock deal for RightWorks

SAN FRANCISCO: In a move that is widely expected to bring an end to the

already strained partnership with Ariba Inc, software maker i2 Technologies Inc.

has announced that it has struck a $14 million all-stock deal to buy the closely

held RightWorks Corp. As the news spread, shares of i2, that closed $3-1/2 lower

at $21-7/16, fell as low as $18.375 in after-hours trading on the Island system.

i2 is the No. 1 seller of "e-procurement" software that enables

companies to manage and automate purchasing and inventory. The acquisition will

round out i2's e-business product suite and position it against its former

partner since RightWorks sells software that helps companies set up

business-to-business online exchanges and buy finished goods and raw materials

over the Internet.

"They now have a lot of functionality offered by Ariba," said AMR

research analyst Bruce Richardson, who called i2's move both offensive and

defensive.

"It means that we truly will be able to compete on our own," i2's

vice president of marketing, Jennifer Tejada, said. i2 and Ariba teamed up with

International Business Machines Corp. last year to form the B2B Alliance, which

targeted the market for online exchanges. From the get-go, analysts had

predicted that i2 and Ariba partnership would split because each had been

introducing software products that were encroaching on the other's market.

A sufficient pointer to the fact was Ariba’s decision to buy Agile Software

Corp. last month, which rivals i2 in certain areas. "Partnerships between

aggressive software companies are always a zero-sum game," Richardson said.

Based on i2's closing stock price, the RightWorks acquisition is valued at about

$114 million.

Under the terms of the deal, which is expected to be increase earnings by

early 2002, i2 will exchange some 5.3 million shares of common stock for all

outstanding RightWorks shares. Internet Capital Group Inc. owns 54 per cent of

San Jose, Calif.-based RightWorks.

Tejada said the RightWorks purchase will expand i2's network of suppliers to

170,000 from 100,000 and give the Dallas-based software maker a leg-up as it

competes for customers that are building private trading exchanges to link them

with suppliers and customers.

"e-procurement tends to be an onramp for companies that are getting into

e-business," Tejada said. i2 was represented in the deal by Goldman Sachs

Group Inc. and the law firm of Brobeck Phleger & Harrison LLP. Credit Suisse

First Boston and attorneys from Cooley Godward LLP, negotiated on behalf of

RightWorks.

(C) Reuters Limited 2001.