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Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail bwalko@sokoloffco.com with your contact information.

Archives > Transaction Case Study #11

Bea Systems, Inc. acquires Fuego, Inc.

Dear Colleague,

Bea Systems, Inc. (NASDAQ:BEAS) announced the completion of the acquisition of privately-held Fuego, Inc. The transaction closed for a purchase price of approximately $87.5 million in cash plus amounts for certain retention and performance bonuses.

BEAS, $1.2 billion in revenue, is in the enterprise infrastructure software business, providing standards-based platforms to accelerate the secure flow of information and services and to improve business agility and efficiency.

While not made public, analysts speculate that Fuego's 2005 revenues were about $15 million. In a January 2006 press release, Fuego reported revenue growth of 112% over 2004, "and bookings and backlog more than tripled".

Fuego is in the business process management (BPM) software industry. The web site describes the company's principal offering: "Fuego's BPM platform is designed to deliver on the promised benefits of a service-oriented architecture (SOA). FuegoBPM automates and optimizes enterprise business processes to help customers reduce costs, improve service and achieve agility at an average of 1/10th the cost of traditional solutions."

BEAS' purchase price of Fuego is about 5.8x revenue of $15 million. The company's share price was not significantly impacted by the announcement.

Fuego’s key competitors are seen to be IBM, Tibco Software and Oracle. "We are systematically targeting the fastest growing segments of the red-hot SOA software market," stated Alfred Chuang, Chairman and CEO of BEA Systems, Inc. "The addition of Fuego to our AquaLogic portfolio means that we are now the only company to offer a unified SOA-based platform to integrate business processes, applications, and legacy environments."

The business process management software market is one of the fastest growing segments within infrastructure software, estimated to top $1 billion dollars by 2008.

We hope that you find this feature from Sokoloff & Co. interesting, informative and useful. We welcome your comments and suggestions.

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