Rational completes definitive agreement to acquire Objectory.
In accordance with this agreement, Rational completed the acquisition of a 54 percent interest in Objectory from L.M. Ericsson AB of Sweden and holds an option, to be exercised in January 1996, to acquire the remaining 46 percent of the company. Rational issued 272,087 shares of its common stock in return for its 54 percent interest in Objectory.
Objectory is a leading provider of business and systems-engineering solutions based on object-oriented software-engineering technology. The company's main product suite, called Objectory, graphically models complex systems in terms of real-world objects and supports the transition from business and systems engineering to software architecture and implementation.
According to Paul D. Levy, president and chief executive officer of Rational, "The Objectory product is an ideal complement to Rational's award-winning Rational Rose product line, which enables customers to complete the process of modeling a software architecture and designing and implementing the resulting software system. The integration of Objectory and Rational Rose lets users, for the first time, apply object technology to bridge the gap between business engineering and systems analysis and software design and implementation. Also, Rational will benefit from Objectory's strong international presence and customer base in markets such as telecommunications, financial services and information systems."
Ivar Jacobson, the founder of Objectory, will be joining Rational as vice president of business engineering. Levy remarked: "Ivar Jacobson, the inventor of use case technology, is a powerful addition to our team and will significantly increase the momentum behind the establishment of an industry standard by Rational for graphical object-oriented programming."
"The combination of Objectory and Rational results in unmatched strengths in the application of object-oriented software process and tools to the development of complex software systems," stated Jacobson. "The application of object technology to business and systems engineering is an exciting market opportunity and Objectory's contribution to establishing a standard for graphical object-oriented development will help to accelerate the growth of this market."
In addition, Ericsson and Rational announced the completion of a strategic partnership agreement that resulted in Ericsson making a multi-million dollar commitment to purchase a significant number of licenses of Rational Rose, which will become an Ericsson corporate standard. Jorma Mobrin, vice president of Core Systems Management at Ericsson, stated, "Combining Rational's leadership in object-oriented development with Objectory's strength in business and systems engineering will result in a broadly adopted standard approach for graphical object-oriented programming. In addition, the breadth of Rational's product solution for developing complex software and its strong international presence make Rational an ideal partner for Ericsson."
The acquisition is being accounted for as a purchase transaction. A total of approximately 750,000 shares of Rational Software Corporation common stock, including the option exercise, will have been issued to complete the acquisition. The total value of the transaction is expected to be in the range of $7.5 million to $10 million. The company intends to allocate a substantial portion of the acquisition cost to purchased research and development, which should be expensed in the December quarter.
To provide for the cost of integrating Objectory, there will be a one-time restructuring charge of approximately $3 million to $5 million, which will also be recorded in the December quarter. As a result of these charges, the the Company will incur a loss in the December quarter.
Rational Software Corporation (NASDAQ: RATL) develops, markets, and supports a comprehensive solution for developing and managing complex software systems. The company provides an integrated family of tools that span the critical phases of the software-development process, from initial analysis and design through delivery and maintenance. In addition, Rational provides a full range of technical consulting, training, and support services as an integral component of its solution. -0-
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