Borland to acquire Starbase

Borland Software has agreed to acquire fellow application development software maker Starbase for $US24 million in cash.

Borland said the purchase of Starbase will help it offer its customers a single, fully featured software set for managing all phases of application design, testing and deployment. Borland will begin selling Starbase products through its own channel once the deal closes, the company said.

The company said it hopes to complete the acquisition during the fourth quarter. Starbase currently has around 235 employees, and while Borland expects some consolidation in administrative areas, major layoffs are not planned, according to Borland CEO Dale Fuller.

"We plan to keep almost everyone in the company because of the growth we see. There's a lot of things we need to do from an R&D standpoint," Fuller said.

Borland intends to keep "significant operations" at Starbase's Santa Ana headquarters, and to leave in place the research and development staffers working there, said Frank Slootman, Borland's senior vice president of software development.

Borland is now evaluating Starbase's portfolio and deciding on the fate of its products, but most will survive and continue to be developed and sold under their current names, executives said. Increasing integration between Starbase's StarTeam change and workflow management software and Borland's JBuilder Java development software will be a priority, Slootman said.

JBuilder is already configured to mesh with StarTeam, allowing developers working within JBuilder to, for example, check files in and out of StarTeam and record changes without leaving JBuilder. But Borland plans to "take the integration up another couple of levels" and more tightly connect the products' technical underpinnings, Slootman said.

The Starbase purchase is part of Borland's plan to take advantage of the depressed economy and its own resources to expand its "development footprint", Fuller said.

"Several years ago, managerial efficiency meant keeping the ship afloat and correcting its course over time. Now it means leveraging our assets," he said. "We have been in the expansion phase of our plans for the last quarters."

So far this year, Borland's purchases include software developers Redline Software (better known as VMGear), Highlander Engineering, Brazilian IT training firm Advanced Training Centre and assets from Swedish developer BoldSoft.

Borland will provide Starbase with $US2 million in bridge financing to fund operations until the deal closes, the companies said.

Starbase is currently operating in the red, but Borland expects the purchase to add about $US35 million to its 2003 revenue and to boost its earnings -- excluding costs related to the acquisition, estimated at $US7 million to US$12 million -- by the second quarter of 2003.

Much of Starbase's sales trouble stems from customer concern about the company's viability, Borland executives said. Borland is confident that once Starbase's products are backed by Borland's corporate stability, sales will increase.