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Story URL: http://management.silicon.com/itdirector/0,39024673,11034038,00.htm

Micromuse snaps up RiverSoft
Network competitors merge...

By Joey Gardiner

Published: Wednesday 19 June 2002

Network management software company Micromuse has bought UK offspring and arch-rival RiverSoft for £43.3m.

Riversoft was founded in 1997 by ex-Micromuse CTO Phil Tee and quickly became a darling of the 90s high-tech boom, eclipsing Micromuse during the dot-com frenzy.

However, recently RiverSoft has struggled, and today the directors of the company accepted the buyout offer.

Micromuse CEO Greg Brown told silicon.com the acquisition of RiverSoft will add a huge amount to Micromuse. He said: "This is not a case of buying a competitor here. Riversoft has a stack of complementary technology and a big European presence.

"Conversely we can give RiverSoft the kind of marketing and sales organisations and global presence it lacks."

He confirmed Micromuse will continue to support RiverSoft products and said he is "excited" by the potential offerings gained by combining the two solutions.

Micromuse confirmed a restructuring of RiverSoft will be needed but Brown refused to comment on the amount of jobs likely to be lost at the firm.

The purchase of RiverSoft brings to an end a five-year saga between the two firms.

Australian born Chris Dawes set up Micromuse in 1989, but things only started happening for the firm when Phil Tee brought network management software into the business.

Reasons for the split between the legendary founder Dawes and Tee have never been made fully public, but Tee was thought to have felt cheated out of the millionaire status achieved by Dawes prior to his death in a car accident.

At its peak RiverSoft was worth nearly £400m, but as today's offer was made the firm's share price was languishing at just over 11p, valuing the company at around £25m.

Last year the firm, which also makes network management software for telecoms firms and service providers, had to lay off a third of its staff due to falling demand.

In a statement to the London Stock Exchange, RiverSoft's directors said it was the global reach of Micromuse which made the takeover a good idea.

They said: "In view of the weakness in the markets in which RiverSoft operates and the increasing need for critical mass and depth of resources in marketing channels in order to sell effectively to major corporate customers, the interests of RiverSoft shareholders would be better served by RiverSoft becoming part of a larger group."

Riversoft shares rose 53 per cent on the news, taking them to 17.25p in midday trading.