Software AG to Buy Terracotta

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May 23, 2011 – Software AG announced a deal to purchase in-memory and cloud application provider Terracotta Inc. for an undisclosed sum.

Terracotta would become the in-memory technology backing Software AG’s products, adding capabilities for cloud adoption, enterprise Java caching and storage of up to one terabyte, according to a news release on the deal. Software AG stated the deal will bring enhancements to its mobile and virtualization business process offerings, including the expected rollout of combined products by the end of this year and a platform as a service cloud release in 2012.

In addition, Software AG CTO Wolfram Jost said his company would have access and support for continued in-memory technology development from Terracotta’s open source community.

Neil Ward-Dutton, research director with U.K. IT analyst group, MWD Advisors, says the deal provides strength to Software AG’s enterprise middleware offerings and messaging, and puts the company in line with releases and acquisitions from competitors like IBM, TIBCO and Oracle. However, he says the current benefits to Terracotta customers joining Software AG may be limited unless the German-based provider makes additional infrastructure acquisitions or unlocks open source versions of its existing products.

“Defensively, Software AG needs to be able to tell customers and the market at large that it has a plan relating to cloud computing, but don’t expect Software AG to build a big business as a cloud infrastructure any time soon,” says Ward-Dutton.

Forrester Research principal analyst John Rymer called the planned acquisition “big” for Software AG’s primary application platform plans, included an expected BPM platform for public and in-house clouds coming this week. Additional connections of offerings from the respective companies should keep Software AG as a leader in ventures such as elastic caching platforms, he says.

“Software AG has a pragmatic plan to incorporate Ehcache and Terracotta Server products into existing businesses. That plan does not require heavy technical integration,” Rymer says.

As for Terracotta, Rymer says the company will remain a standalone operation that keeps intact its headquarters, executives and projects, though obviously that could change in the long term.

Financial details of the acquisition agreement were not released by either company. The deal is expected to close in June, subject to customary conditions.

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