Macromedia has agreed to merge with Allaire, a move designed to help companies create Web content that can be accessed on multiple devices besides PCs.
Macromedia said it has reached a definitive agreement to merge with Allaire in a deal valued at US$360 million on a fully diluted basis. Like Macromedia, Allaire makes software for developing and managing Web content. The companies look to offer combined products that include server, authoring and playback software.
Rob Burgess, chairman and CEO at Macromedia, will continue as head of the merged company.
While the merged company will retain the Macromedia name, it will gladly adopt some of Allaire's product line. To compliment its Dreamweaver and Flash software, Macromedia highlighted Allaire's ColdFusion cross-platform Web application server and JRun J2EE (Java 2 platform, Enterprsie Edition) applications server.
Macromedia and Allaire have been partners for some time and now hope to further the union of their products. In November of last year, Allaire forged a partnership with Macromedia to bundle its application server with Flash and build an integrated toolkit for developing content.
Now, the merged company will work to bring the ColdFusion development platform into line with Sun's J2EE standard. In addition, Macromedia will develop a set of application services - reusable components and application logic - that build on software platforms, including Java and Microsoft's .NET.
Over time, the companies' combined offerings should help developers create applications and Web content that can be viewed on devices such as handheld computers and cell phones as well as PCs, the companies said in a statement. Macromedia said its platform will enable developers to develop content once without needing to rewrite application logic for each device.
The companies didn't provide a timeframe for when any combined products resulting from their merger would be available. Macromedia expects the deal to close by the second calendar quarter of this year, following Allaire shareholder and regulatory approval.
At the same time as the announcement of the merger, Macromedia reported strong financial results for its third fiscal quarter.
For its third quarter ending Dec 31, Macromedia reported revenues of $103.3 million or a 61 per cent increase year-over-year. This revenue growth helped Macromedia edge out analysts' estimates, as the company posted $0.29 earnings per share. Analysts polled at First Call/Thomson Financial predicted $0.27 for the period.
Shares of Macromedia (MACR) closed up almost 5 per cent to $44 on the Nasdaq stock exchange. In the after hours markets, however, the stock dropped over 8 per cent, hovering just above $38 at the time of this report.