By Eric Auchard
WebEx Communications Inc. a Provider of Online business meetings, on Monday said it agreed to buy privately held Intranets.com for about $45 million in cash, seeking to target small business clients.
WebEx, which has typically focused on helping big customers such as Boeing and the Defense Department conduct meetings online, said the acquisition of Intranets.com helps WebEx expand to serve organizations of under 100 employees.
Intranets.com of Burlington, Massachusetts offers communication services to more than 300,000 paying subscribers and 10,000 businesses.
"This is all about unlocking the wide(r) strategy of going after100-person (or less) companies," WebEx president Bill Heil said in a phone interview.
Intranets.com, which was founded by a group of ex-Lotus Development Corp. employees in 1997 after IBM (NYSE:IBM - news) acquired Lotus, provides collaborative software that allows teams of people to collaborate remotely on projects.
Santa Clara-based WebEx has been gaining market share in the fragmented market for video conferencing in recent years, in spite of the entry of Microsoft Corp. two years ago after it acquired WebEx rival PlaceWare.
A study by Frost & Sullivan found WebEx held 60 percent of the online meeting market in 2004. With revenue growth of 23 percent this year, WebEx is growing faster than the online meeting market, which analysts estimate is growing 18 percent.
WebEx has begun targeting the consumer and small business market with a new offering it calls MyWebEx.
Both WebEx and Intranets.com share a common sales approach, which includes billing customers a recurring monthly subscription fee. Both offer their software as hosted services that customers use over the Internet, Heil said.
WebEx offers online meetings, while Intranets offers a set of online office software tools, including databases, calendaring, scheduling and other project management tools.
The Intranets.com deal has been unanimously approved by the board of directors of each company, the two companies said in a statement. The transaction is expected to close in the current quarter, subject to customary closing conditions.
WebEx shares rose 1 percent to close at $28.89 in Nasdaq trading ahead of the announcement of the deal. The shares were unchanged in after-hours trading.
Copyright 2005 Reuters Limited.
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