ICG Acquires stake in RightWorks for $657M  

San Jose, Calif.; March 10 - RightWorks, a leading maker of electronic-commerce procurement software for business-to-business exchanges, has sold a 53 percent stake in the company to e-commerce investment firm Internet Capital Group for $657 million, the two companies announced March 8.

Founded in 1996 by Vani Kola, San Jose-based RightWorks will receive $22 million in cash and about $635 million in stock.

The deal valued the company, whose customers include Aspect Development, Trade Matrix.com, VerticalNet and Wells Fargo & Co., at about $1.25 billion.

"This agreement is a tremendous confirmation of our decision to focus on the needs of digital marketplaces," said Kola, in New York for an ICG presentation to institutional investors.

"We are excited that, as the leader in B2B e-commerce, ICG shares our vision and sees the same potential we do for RightWorks to become the global industry leader in B2B exchanges and e-procurement."

The software developed by RightWorks allows companies in their own Internet marketplaces to communicate with two of the largest B2B e-markets, Ariba Inc. and Commerce One, firms that allow buyers and sellers to meet online for all types of transactions.

"RightWorks provides a fundamental and enabling technology that provides the foundation for digital exchanges," said Ken Fox, managing director and co-founder of Internet Capital.

RightWorks 5.0, the latest release of the company's flagship product, includes innovations such as an open "many-to-many" trading platform.

"This looks like a good technology," Henry Blodget, Internet analyst at Merrill Lynch & Co., told Bloomberg News Service. "In almost every software market there are usually three or four players, and over time the world begins to standardize around one player," which could be ICG.

ICG, whose stock is up almost 24 times since it went public in August, has a market value of about $36 billion. The stock fell by day's end March 8 to 138-1/8, down 3-3/64 for the day.

A Robertson Stephens analyst earlier in the week named the company as its "top pick"' in the B2B industry, according to Bloomberg. The Gartner Group, a market research firm, estimates that worldwide business-to-business e-commerce could total $7.3 trillion by 2004.

A graduate of Osmania University, Kola has a master's degree in electrical engineering from Arizona State University. She worked on real-time software applications for Empros, a division of Control Data Corp., and then designed a sales and inventory scheduling system for the pharmaceutical industry at Consilium, before "getting a preliminary idea and deciding I would do something about it" in 1996.

She spent hours in the local library researching the industry and then built a company that by early 1999 had attracted over $11 million in venture capital, with three major customers: Fujitsu Computer Products of America, E-Tek Dynamics and Applied Materials.

Wayne, Pa.-based Internet Capital Group is building so-called digital market places for the top 50 global industries.

Internet Capital now owns stakes in five publicly traded companies that help businesses work better on the Internet - VerticalNet Inc., eMerge Interactive Inc., Breakaway Solutions Inc., Emerge Interactive Inc., Onvia.com Inc. and U.S. Interactive Inc. It works with a total of 50 private companies and has $1.3 billion more to invest, according to company officials.