Copyright (c) 2005 ALA TechSource
Abstract: Days before ALA's late-June Annual Conference and Exposition in headquarter-city Chicago, two major ILS players, Sirsi and Dynix, announced the companies’ pending merger. The agreement the two privately owned companies signed initiates the colossal effort the organizations will undertake in order to emerge as the largest library automation company in the industry: SirsiDynix. The combined company will employ more than 725 and will have potential annual revenues of more than $125 million.
Days before ALA's late-June Annual Conference and Exposition in headquarter-city Chicago, two major ILS players, Sirsi and Dynix, announced the companies’ pending merger. The agreement the two privately owned companies signed initiates the colossal effort the organizations will undertake in order to emerge as the largest library automation company in the industry: SirsiDynix.
Talk of this merger—of the two largest library automation vendors—was as hot as Chicago’s late-June temperatures. “Some librarians expressed the general concern that, regardless of the industry, the country, or the historical period, when the two largest companies in an industry merge to form a new company that dwarfs the remaining competition, a decrease in competition and innovation, as well as an increase in prices, appear to be the probable outcomes,” explains Tom Peters, librarian, SLN contributor, and founder of Tap Information Services. “Other librarians, looking at the existing cultures and products offered by Sirsi and Dynix, basically see a good match,” Peters adds.
The combined company will employ more than 725 and will have potential annual revenues of more than $125 million. (Because the two companies are privately held, financial terms of the deal were not disclosed.)
The combined customer base for SirsiDynix totals more than 4,000 installations, including libraries running Unicorn, Horizon, Dynix Classic, DRA Classic, and MultiLIS.
Although Sirsi entered the deal as the smaller company, it emerges as the controlling player. President/CEO of the former Sirsi Corp. Patrick Sommers will head the company, and Jack Blount, who headed the former Dynix organization, has been tapped as executive technology consultant and will oversee the completion of the Horizon/Corinthian 8.0 development. Don McCall will serve as chief operating officer at SirsiDynix.
Sirsi and Dynix have been competitors for more than 20 years, each offering library automation systems for public, academic, and special libraries. The companies have similar breakdowns by library type, with about fifty percent of new sales to public libraries. But despite their parallels, the integration of the two companies into a single organization will be a major challenge. Sirsi does come to the process with recent experience gained through the 2001 acquisition of St. Louis-based DRA.
This merger also follows Sirsi’s recent acquisition of Docutek Information Systems, a relatively small transaction but one that served as an early indicator that the company’s financial backers were interested in expanding investment in the library automation arena.
SirsiDynix states it will support the library automation systems of both companies. Ultimately, the success of the new company will depend on the satisfaction of its customer libraries.
In regard to integrated library system products, with over 180 personnel involved in development, the new company’s development resources exceed that of any automation company.
SirsiDynix also reports it will continue development and support for the flagship systems from both former companies: Unicorn, Horizon, and the recently announced Corinthian system for academic libraries.
In addition, both companies have developed portal products, including the Sirsi Enterprise Portal Solution and the Horizon Information Portal. Sirsi also offers three Web-based online catalog interfaces: iLink/iBistro, Web2, and WebCat. Even at this early stage the company indicates it will converge portal development toward a single offering.
Company executives also emphasize that aggressive development of Horizon/Corinthian 8.0 will continue. This new automation system has been reworked completely from previous versions of Horizon and is near completion. Beta testing will be underway by fall 2005 with production release expected in early 2006.
Dynix has invested a large portion of its efforts over the last three years in the creation of this next-generation system. As part of its due diligence prior to acquiring Dynix, Sirsi commissioned Gartner to evaluate Horizon/Corinthian 8.0 and received a favorable analysis.
The new company also inherits three legacy systems, including Dynix, DRA Classic, and MultiLIS. These systems were each very popular at one time but have since seen a decline in user base and have been superseded.
Much of the ILS procurement activity in the last five years has involved libraries operating one of these legacy systems migrating to the new automation systems. Sirsi and Dynix have both focused considerable marketing energy on retaining their customer libraries running their legacy systems. To a large extent, Sirsi’s legacy systems have run their course. A considerable number of libraries continue to run Dynix Classic and will be selecting replacement systems in the next year or so. The new company will continue to support DRA Classic, MultiLIS, and Dynix for as long as planned prior to the merger.
The merger of Sirsi and Dynix will result in a larger and more efficient company. Prior to the merger, both companies were profitable, but given it can combine redundant administrative functions such as accounting, human resources, and marketing, the new SirsiDynix will be able to stretch further. In other words, by merging, the companies become more profitable together than they were apart.
Since 1999, Sirsi has operated with financial support of Seaport Capital. At that time, Seaport re-capitalized the company, acquiring significant equity ownership from Sirsi’s founders.
Since that time, Seaport has renewed its investments multiple times, including backing the acquisition of DRA. With the acquisition of Dynix, Seaport once again increases its investment and will own about eighty percent of the merged company.
Prior to its acquisition Dynix was controlled primarily via three venture capital firms: 21st Century Group, Green Leaf Ridge, Stratford Capital Partners. 21st Century Group and Stratford have ties to the massive Texas-based investment firm Hicks, Muse, Tate & Furst. Green Leaf Ridge Company was founded in 1998 by Percy L. Berger, Sr., and appears no longer to be an active firm. Hicks, Muse, Tate & Furst will retain about a ten percent ownership in SirsiDynix.
This new company holds the remnants of many companies from earlier times of library automation. Taos, DRA, INLEX/3000, MultiLIS, NOTIS, Dynix, Marquis, LS/2000, PALS are some of the systems that had been acquired previously by either Sirsi or Dynix.
Consolidation has been a longstanding theme in the industry but one that has played out at a relatively slow pace. Even with this major merger, quite a number of companies remain, leaving room for vigorous competition and many choices of automation systems for libraries.
|Type of Material:||Article|
Smart Libraries Newsletter|
|Volume 25 Number 8|
Mergers and acquisitions|
|Last Update:||2012-12-29 14:06:47|
|Date Created:||0000-00-00 00:00:00|