EScout to acquire CommerceOne's online marketplace

EScout to acquire CommerceOne's online marketplace

Software vendor Commerce One is to sell its Commerce marketplace to eScout LLC, the companies announced Thursday.

EScout, in Lee's Summit, Missouri, will acquire Commerce's three lines of business: Marketplace Operations, Managed Applications Services (MAS) and Content Operations to create what the companies claim will be the largest business-to-business (B-to-B) e-commerce marketplace, eScout and Commerce One said in a statement. Financial terms of the agreement were not disclosed.

Representatives from eScout and Commerce One could not immediately be reached for comment.

As part of the deal, which is expected to close in the first quarter of 2003, Commerce One will increase its equity ownership stake in eScout and will obtain a seat on eScout's board of directors, the companies said. The new company will remain a private operation.

The combined B-to-B marketplace will offer supply-chain services to Fortune 2000 clients, including Interstate Bakeries Corp., the U.S.' largest baking company with brands such as Wonder Bread and Twinkies, eScout and Commerce One said.

Commerce's marketplace, which currently connects 38 Fortune 2000 buying organizations with over 1,500 suppliers, processed over 896,880 postal orders and transactions for products and services valued at US$1.5 billion in the first three quarters this year, the companies said.

But like many companies in the e-business software market, Commerce One, based in Pleasanton, California, has been undergoing a difficult year, having recorded in October a 78 percent drop in revenue for the first six months of the year. Half-yearly revenue went to $59.6 million from $271.6 million in the first half of 2001, with a net loss of $291.7 million. Commerce One announced at the time that it will lay off 400 of its current 1,100 staff by the end of this year.

The growth of B-to-B online buying in general is being affected by the confusion companies face when deciding how to procure goods and services online, according to a study released Thursday by Stanford Graduate School of Business.

Because no single system yet dominates the market, potential customers often can't choose between e-procurement software, online market exchanges, B-to-B auctions or purchasing consortia, Stanford University said in a statement promoting the research paper "Moving Procurement Systems to the Internet."

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