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TIBCO Software and Talarian Corp. announced last week that the two companies have entered into an agreement for TIBCO to acquire Talarian in a stock and cash transaction valued at approximately $115 million. TIBCO will pay $5.30 per share, half in stock and half in cash, for each of Talarian's outstanding shares.

This acquisition solidifies TIBCO's market lead for real-time messaging in the financial services sector. Talarian has 300 customers, primarily in the financial services, telecommunications and aerospace industries. Currently, Reuter, a majority owner of TIBCO, has sole authorization to sell and support TIBCO products in the financial services industry. This is TIBCO's largest and most important market. Only 40 of Talarian's 300 customers are currently also TIBCO customers. Since Talarian has real-time messaging software and does not have a full-blown EAI suite with B2B integration, data translation and transformation, or business process integration, the acquisition provides significant opportunities to upsell TIBCO's software line into the Talarian customer base.

Both TIBCO and Talarian have multicast protocol technology. This technology is well suited to broadcast messages, where one provider sends a message to many subscribers. While most EAI vendors support publish-and-subscribe technology, the underlying messaging system actually sends a separate message to each subscriber. The multicast protocol broadcasts just one message to multiple recipients, greatly reducing network traffic. As new Web services and Internet applications are deployed, uses for the multicast broadcast technology over the Internet will increase. For one-to-many broadcast messages, the multicast protocol greatly reduces bandwidth.

This acquisition seems aimed at increasing market share in the financial services industry and acquiring new customers rather than plugging technology holes in the TIBCO line. While TIBCO is still missing EDI technology, Talarian does not provide it. By acquiring Talarian, however, TIBCO has eliminated one of its major messaging competitors in the financial industry, thereby consolidating market share and gaining an installed base for its EAI and B2B technology.

About the Author

Beth Gold-Bernstein is an author and independent consultant specializing in SOA solutions. www.gold-bernstein.com.

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