Level 3 To Acquire Software Spectrum, Merge With Corporate Software Subsidiary
May 02, 2002 12:58 PM ET
Two of Microsoft's key resellers, Corporate Software and Software Spectrum, will merge as part of Level 3 Communications purchase of both companies.
On Thursday, Level 3 announced the $122 million buyout of Software Spectrum, at a price of $37 per share. Wednesday's closing price for the Dallas-based reseller was $16.66 per share.
Software Spectrum will merge operations with Corporate Software, a $1 billion software distributor and services company also acquired by Level 3 Communications in March. The boards of both Software Spectrum and Level 3 have approved the acquisition.
The deal is expected to close by the third quarter. Howard Diamond, CEO of Corporate Software, will serve as chairman of the combined company. Judy Odom, current chairman and CEO of Software Spectrum, will serve as CEO. Keith Coogan, a longtime executive at Software Spectrum, will serve as president and COO.
The combination of Level 3's IP bandwidth with those two IT and licensing services companies is a strategic move for the Web services era, Diamond said.
"They're a great fit," said Diamond, who added that he's been trying to acquire Software Spectrum for six years. "The future of the industry is focused on .Net software and software by the drink. The concept of combining our capabilities and Level 3's ubiquitous bandwidth makes us a unique player. Now you lay Software Spectrum on top of that and it makes us bigger, stronger and better positioned for Web services and .Net."
The acquisitions and mergers of the former resellers signals a major transformation under way in Microsoft's traditional channel. Until recently, Corporate Software and Software Spectrum handled all the negotiations, cash flow and distribution for a big portion of Microsoft's software business. As part of a new channel model unveiled in 2001, Microsoft took that business direct and anointed its old resellers as enterprise software agents (ESAs) who would compete on licensing services, not on software pricing.
Diamond said the merger of Microsoft's two largest licensing management partners under Level 3 has nothing to do with Microsoft's new ESA model. The consolidation, he said, is about redefining strategy as the traditional software distribution business transforms from packaged product into a subscription-based Internet service.
Level 3 Communications is a major ASP and communications and information services company offering IP services, broadband transport and co-location services. It also offers IT services through wholly owned subsidiaries Corporate Software and iStructure, an ASP.
|
Five Companies That Dropped The Ball This Week For the week ending Feb. 10, CRN looks at five companies that were either asleep at the wheel or just didn't make good decisions. |
|
Five Companies That Came To Win This Week For the week ending Feb. 10, CRN looks at five companies that brought their 'A' game and made moves to beat out competitors |
|
10 Challenges That HP Wants Partners To Tackle Right Now CRN speaks with HP's business unit chiefs to get a sense of where they'd like partners to focus in the coming year, as well as how CEO Meg Whitman is making a difference. |
 More
Slide Shows |
- Level 3 To Acquire Corporate Software
- CRN Radio's Steve Burke: Cisco Must Level Playing Field
- CRN Radio's Kelley Damore: Cisco Should Gauge SP Satisfaction
- CRN Radio: Behind The Scenes At Compucom
- CRN Radio: NearTek Wins CA's Innovator Of Year
- Cognizant Sales Soar, Exec Promotions Follow
- VAR500 Company EPAM Systems: IPO Update
- Level Three To Buy Corporate Software
- Corporate Software Gets Makeover
- Level 3's New Channel Chief Plots Growth Strategy With VARs
- Level 3 Executive Changes Include New Channel Chief
