Siebel buys Irish banking software firm for US$130m

20 Apr 2004

CRM giant Siebel Systems has acquired Irish banking software player Eontec for US$130m in an all-cash deal that will add to the coffers of investors, who include Denis O’Brien and founder Jim Callan. The acquisition will enable Siebel to deliver a next-generation retail banking solution from its armoury of technologies.

Under the terms of the deal US$70m in cash will be paid to Eontec initially, and an additional US$60m will be paid in cash by 2005, including US$30m in earn-out payments to the firm’s shareholders.

Siebel said that the cost of the acquisition will reduce its Q2 earnings by up to US$0.01 per share, with a one-time charge in the area of US$3m to US$7m.

All Eontec employees will become members of Siebel’s Retail Finance division.

Eontec’s technology, which is built on an industry standard J2EETM application server platform, enables banks to deploy banking services across multiple channels, including telephone and internet.

“The combination of Siebel Systems and Eontec is a winning one for the retail banking industry and its customers worldwide,” said Thomas Siebel, chairman and CEO of Siebel Systems. “Retail banks are increasingly realising they must transform branches from transactional centres into customer-centric sales and service centres that work seamlessly in concert with other channels. To do so, they require next-generation technology that not only replaces outdated teller systems, but also leverages CRM and business intelligence tools to reduce operational costs, improve employee productivity, and support business processes needed to strengthen customer relationships. With this acquisition, Siebel Systems provides the most complete multi-channel customer-centric banking solution on the market.”

The news was welcomed by IBM, which partners with both Eontec and Siebel on global banking projects. Mark Greene, the general manager of IBM’s global banking division, commented: “Banks around the world have standardised on IBM’s WebSphere, and this represents a great opportunity for them to pair their WebSphere-based multichannel strategies with the only retail banking solution that combines financial transaction, CRM, and business intelligence capabilities. Also, IBM’s consulting, solution design integration, and implementation services are a strong complement to these important new offerings.”

The CEO of Eontec, Patrick Brazel, who will now lead Siebel’s retail finance division, said that the two companies aim to change the banking software industry by providing a retail banking solution that meets the needs of financial institutions of all sizes worldwide.

Brazel said: “With Siebel Systems’ complete retail banking solution, enhanced by Eontec technology, banks can replace branch applications and infrastructure that have not been updated during the recent expansion into alternative channels such as the Internet, call centre, and ATM.”

Once tipped for a Nasdaq listing, Eontec raised €10.4m in venture capital in 2000, followed by US$25m funding in 2001 in a round led by Warburg Pincus, ICC Venture Capital and Denis O’Brien.

By John Kennedy