Merger season continues with WRQ's latest Attach-ment

April 2005

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Merger season continues with WRQ’s latest Attach-ment

The company that’s placed its connectivity products on six million desks, including HP 3000 users’, has extended its reach with another merger. WRQ’s new owners, Golden Gate Capital, Francisco Partners and Thomas Cressey Equity Partners, have purchased WRQ rival Attachmate. When the transaction completes at the end of May, Attachmate will merge with WRQ.

Attachmate made some attempts at offering an HP 3000 connectivity solution in KEA! during the 1990s, but its primary marketplace has always been among IBM customers. A note alerting journalists to the merger pointed out that the combined company will have a 16 percent market share in host connectivity solutions, “second only to IBM.” WRQ has built up its IBM-based solutions before branching out into development tools prior to its purchase in December, 2004.

Any merger that involves a company purchasing a rival can spark concerns among customers. Attachmate’s press release called WRQ “Attachmate’s cross-town competitor.” Both firms do business in the Seattle area, where the combined company will remain. So customers, like those in the recent deal between Adobe and Macromedia, usually worry “will my product be dropped?” WRQ moved to quell some concerns with an April 18 letter from Shaun Wolfe, the CEO who took over for WRQ founder Doug Walker in January.

“Whether you are an Attachmate or WRQ customer, or a customer of both, your choice of product, maintenance support, and services is safe,” Wolfe wrote. “And our future direction will be determined by continuing to listen to our customers.” Even though the companies offer overlapping products, the near future won’t hold any changes, Wolfe’s letter added.

“Until the merger is complete in the next 45 days or so, Attachmate and WRQ will continue to operate as separate companies. None of our contractual agreements or contract details, including support or product licensing arrangements, will change.”

Some changes are already in play at WRQ, however. The company announced that WRQ CEO Wolfe will take a position in the combined company as Senior Vice President of Products and Marketing. Jeff Hawn, named WRQ chairman after Walker retired, will become chairman and CEO of the combined company. Hawn’s prior experience includes BMC Software, where he was senior vice president of operations, and McKinsey & Company, where he was a partner.

Like Walker’s departure in December, Attachmate’s founder Frank Pritt will retire from his company when the acquisition is complete. Attachmate’s description of itself notes the company was started in Pritt’s living room in 1982. Attachmate bills itself as one of the largest privately-owned software companies. The combined firm will have revenues of more than $200 million. WRQ, also privately-held, reported revenues at $138 million in 1997.

Companies with significant HP 3000 assets have been prized of late. Ecometry’s holding company mirrored this merger of emulation software rivals earlier this year, when the holding company purchased Blue Martini Software. Ecometry was purchased last December by a combination of insider stock and outside investment capital. Also set to close this month is another 3000-related acquisition, when Activant’s $114 million offer for Speedware is scheduled for regulators’ approval.