Both firms develop technologies to help companies manage their spending, but only Procuri's been on-demand from the beginning. Its more than 300 customers include Domino's Pizza
On its conference call, Ariba's management was quite bullish on the deal's synergies. Within three quarters, the company expects the transaction to contribute roughly $0.10 per share in annual earnings.
Besides cost savings, the deal will also let Ariba more effectively leverage its strong global platform of partners, consultants, and customers. The company's software runs on 4 million desktops, processing roughly $170 billion in transactions over the past year.
All the same, tech deals can have complications. One aggressive spending-management rival, Emptoris, is already attempting to lure Ariba and Procuri customers to switch to its service with a credit for one year's subscription. Ariba must also contend with megacompetitors such as SAP
As I've said before, I'm cautious about Ariba. The company's made important strides, but its rocky transition isn't over yet, and it'll take some time for the Procuri deal's benefits to kick in. Until then, I'm content to wait and see how this stock fares before I consider jumping in.
Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 5,691 out of more than 65,000 total participants in CAPS. The Fool has a disclosure policy.