Iona's share price surges after unveiling of Netfish acquisition

Iona Technologies shares made strong gains on the Nasdaq market yesterday after the Irish software group unveiled its biggest acquisition to date, the $270 million (€298.6 million) takeover of Californian business-to-business software group Netfish Technologies.

From its overnight level of $49.06 (the price on which the $270 million price tag is based), Iona shares rose almost 10 per cent in the first half hour of trading. After heavy trading Iona shares closed on $58.12, a rise of $9.06 on the day.

Existing Iona shareholders will be diluted by almost 28 per cent after Iona issues 5.5 million new shares to the shareholders of the privately-owned California company.

The new shares will bring some new industry shareholders onto the Iona share register, including computer giant Oracle, which took part in a $30 million mezzanine fundraising by Netfish last April. Others who took part in that fundraising included private equity firm Bain Capital, which is also one of Iona's bigger institutional investors.

Netfish was founded in 1997 and is a major supplier of network-based business-to-business solutions using its XML products. The company employs nearly 300 people, who will become Iona employees. Netfish chief executive Mr Ravi Iyer will become Iona's executive vice-president of market development.

The acquisition of Netfish will enable Iona to extend its enterprise integration services and offer what it claims is a total business integration package.

Netfish's core product is a web-based business-to-business solution that enables companies to extend their business processes securely over the Internet.

Iona said yesterday it would incorporate this technology and establish a complete e-business platform for business integration.

Mr Jerry Henighan, technology analyst with Goodbody Stockbrokers, said the acquisition of Netfish was very complementary and a "good fit". "It enables Iona to move up the food chain and offer business applications integration systems as well as technical integration at a deeper level."