Progress eats Iona — now what?

Under the topic of “Who did not see this coming?” Progress said Wednesday it is offering $4.05 per share in cash for Iona, a total equity value of $162 million, or $106 million net of cash and marketable securities.

It was no secret that Iona was looking for a buyer, and Progress seems like a logical acquirer. Now, they have more in their shop to sell in the SOA space and a nice way to penetrate deeper in a market that’s still emerging. Also, good price. For the legacy business alone, $106 million seems well worth the money. However, I don’t have the specifics around the deal.

Iona was huge in the heyday of CORBA-based distributed objects in the early and middle ’90s, and beat the other contenders into the ground, grabbing most of the share. That has become a nice legacy business for them.

I’ve been openly critical of Iona in the past, some time ago. However, recently, I think the company has done a good job in doing what it can with the assets it has. I’ve been in that situation a few times in my career, and it’s not easy to think innovatively when the amount of money you can spend is diminishing, and the market is changing directions on you. Indeed, Eric Newcomer has hung in there through thick and thin, and I’m sure will be a core contributor to Progress, if he’s going with the transaction.

Progress should make sure that it gets its SOA strategy defined and externalized quickly, including the integration of the Iona product. Figure it’ll bump heads with the mega-stack guys, including Software AG, Oracle, and IBM, so speed is going to be a critical success factor. Moreover, its existing legacy customers need to understand how their stuff fits into the strategy.

I’ll keep an eye on this one.