Peregrine Systems buying rival

The Associated Press
Tuesday June 12, 2001

SAN FRANCISCO — Rapidly expanding Peregrine Systems Inc. announced Monday it will buy rival Remedy Corp. in a deal that will unite two leading makers of software that helps companies identify and fix problems in their computer networks. 

San Diego-based Peregrine will pay $275 million in cash and 27.9 million shares of its stock to take over Mountain View-based Remedy. 

The sales price translated into $1.1 billion when the deal was announced early Monday, but the value fell to $987 million after investors dumped Peregrine’s stock on news of the sale. Peregrine’s shares dropped $3.30, or 11.5 percent, to close at $25.51 Monday in trading on the Nasdaq Stock Exchange. 

The sale lifted Remedy’s recently slumping stock, as the company’s shares climbed $12.18, or 66 percent, to close at $30.52. 

Monday’s deal continues a year-long shopping spree for Peregrine, a 20-year-old company that went public in 1997. Since June 2000, Peregrine has paid $1.76 billion in cash and stock to buy Harbinger Corp., Loran Network Holding Corp. and Tivoli Service Desk. 

After the Remedy takeover, Peregrine’s CEO Steve Gardner will run the combined company, which will be based in San Diego. Remedy CEO Larry Garlick will have a seat on the combined company’s board. 

Several hundred workers are expected to lose their jobs as management jettisons overlapping operations in an effort to save $40 million to $50 million annually. 

Peregrine employs 3,000 workers and Remedy has 1,300 workers. Although the companies didn’t specify how many layoffs will occur, industry analyst Patrick E. Mason of Wit Soundview predicted 7 percent to 10 percent of the workers will lose their jobs, leaving the combined company with fewer than 4,000 employees. 

“We will take the very best (workers) that we can from each organization,” Gardner said during a conference call with analysts. 

Pending regulatory and shareholder approvals, Peregrine expects to complete the Remedy purchase in late August or early September. 

Combined, the companies expect to generate annual revenues of more than $1 billion. Peregrine’s revenues totaled $565 million in its most recent fiscal year ending in March, while Remedy reported sales of $288.5 million last year. 

The marriage will meld Peregrine’s strength selling to large corporations with Remedy’s focus on small to mid-sized businesses. 

Because it targets smaller businesses, Remedy has been harder hit by the dot-com downturn than Peregrine. After losing $6.2 million in this year’s first quarter, Remedy laid off 7 percent of its work force in April. 


On The Net: