CA Acquisition Targets Application ManagementCA Acquisition Targets Application Management

CA plans to pay $375 million in cash to buy Wily Technology, an enterprise application management solution company.

"With this acquisition, CA will be the only company to address the management of applications, IT assets and users across all hardware and software, from the mainframe to the distributed environment," CA President and CEO John Swainson said Thursday.

CA announced the move during a teleconference Thursday. The company expects Wily to contribute about $72 million in revenue in fiscal year 2007.

Swainson said CA hopes to reap the benefit of expansion in the application management market by providing its customers with more tools to manage IT environments from applications to infrastructure.

Gartner forecasts that the application management market will grow to more than $1 billion in 2007. The market is expected to grow to almost $1.4 billion by 2009, according to Gartner.

Wily boasts of having more customers than all of its competitors combined and being a leader in J2EE Application Management in April 2005. More than 450 leading enterprises and government organizations worldwide use Wily's products for real time visibility into billions of customer transactions and for rapid detection and diagnosis of slowdowns and failures. Swainson said Wily is the fastest growing major company in the application management market.

Starwood Hotels, FedEx.com, British Airways, Barclay's, Cingular and several major automakers, including Chrysler Daimler, use Wily's products. Wily's revenues grew by 48 percent in 2004 (audited) and 2005 revenues are expected to increase by 75 percent – more than three times as fast as its overall market segment.

The acquisition fits into a greater vision for delivering enterprise IT Management, which CA announced last year.

Executives from both companies said the privately-held Wily had no plans to sell and was, in fact, headed down an IPO path when CA President and CEO John Swainson requested a meeting. Wily's Dick Williams said he agreed to meet with Swainson because they used to work together at IBM.

"With CA, we can reach more organizations than ever before with our innovative technology, expert people and best practices," Williams said Thursday. "And, by accelerating our development and integrating our technology with CA's solutions, we will be able to deliver a scope of management products unmatched by anyone else." Williams said he was eager to tap into the potential of CA's 2500 sales executives and 1,000 account managers, as well as access to a much larger customer base.

Wily will retain most of its 260 employees and operate as a new division under CA's Enterprise Systems Management business unit. The division is expected to provide CA's customers with the tools to better assess how applications are affecting business, while improving customer service and IT productivity. Williams and Wily's founder and Chief Technology Officer Lewis Cirne will head the division with the assistance of a cross-technology integration team.

Product integration roadmaps will be released about 30 days after the acquisition, which could be complete within three months, pending regulatory approval.

The acquisition is expected to dilute CA's earnings per share by about two cents in fiscal 2006 and be neutral in 2007. After that, executives are shooting for a return of more than $30 million.