The OneSource board of directors has accepted an offer from ValueAct Capital to acquire OneSource through a merger of all of the outstanding shares of common stock ValueAct does not own, at a price of $8.40 per share in cash. ValueAct Capital and its affiliates currently hold approximately a 32 percent ownership interest in OneSource, which trades on the NASDAQ as ONES. The transaction is subject to shareholder approval and is expected to close in the second quarter of 2004. While considering this offer—and dealing with the resignation of its CEO and the disappointing year-end financial report that it issued on Feb. 5—OneSource was preparing an important product rollout. Today, Feb. 23, the company is announcing new Synergy Solutions offerings tailored for specific industry sectors. While the product announcement might seem to take a backseat to the acquisition news, the new professional services offerings, which result from a year and a half of behind-the-scenes technology enhancements, represent a very important development for the company and its customers.
ValueAct Capital had entered an unsolicited bid of $9.50 per share in October 2003 to purchase the company. That offer prompted several months of investigation by a special committee that examined the offer, other options, and potential buyers for the company. No final acquisition offers emerged. In early February 2004, ValueAct withdrew its offer, OneSource announced its 2003 financial report, which revealed declining revenues and a substantial drop in net income, and Dan Schimmel resigned after 12 years as CEO of OneSource. Current chairman Martin Kahn was named executive chairman and appointed CEO on an interim basis. Then came a revised bid from ValueAct on Feb. 9 for $8.10, and finally the agreed upon price on Feb. 18.
OneSource has a market capitalization of about $84 million, with about 11.35 million shares outstanding. ValueAct Capital, with approximately $1.1 billion under management, invests in a limited number of small-capitalization companies. According to an e-mail sent to OneSource employees by interim CEO Kahn: "The principals at ValueAct have demonstrated expertise in identifying companies they believe to be fundamentally undervalued, and then working with management and the company's board to implement strategies that help each company to realize its full potential and to generate superior returns on invested capital. OneSource, as a private company and with the support of ValueAct, will be able to more effectively reach its goals and attain its operating objectives."
Kahn said that the current OneSource operations are expected to continue as is and in their current locations. OneSource has approximately 230 full-time employees and is headquartered in Concord, Mass. Most of the senior management team at OneSource has worked together since the company was a division of Lotus. Schimmel was general manager of the OneSource Division of Lotus Development Corp., which became OneSource Information Services, Inc. in 1993. Under Schimmel's direction, OneSource transitioned from CD-ROM products to being a leading provider of Web-based business information to professionals. No details were provided about Schimmel's resignation.
The new Synergy Solutions offerings being announced are made possible by a new version of the OneSource AppLink Pro Software Development Toolkit (SDK), which is based on XML and enables companies to integrate OneSource content into third-party applications. It lets companies customize the presentation of the data whether it's for an intranet, a CRM application, or an enterprise information portal. The key enhancement in the new version is that it now supports comprehensive screening of the data, allowing users to search across all content types by criteria such as geography, size, industry, and similarities to another company. This capability has been available in the Web-based OneSource Business Browser products but not in the embedded solutions. Eric Chetwynd, product manager for AppLink, said the company's largest customers had requested this capability.
The other key behind-the-scenes development is the redeployment of all OneSource content—known as the OneSource Enhanced Information Warehouse—on a single, unified database structure. The new platform, based on Oracle technology, allows users to build complex queries easily across all types of content, including structured data, such as financial information, and unstructured data, such as news and analyst reports. The new platform will also enable more rapid deployment of new product functionality for OneSource users and faster integration of new content.
The three new Synergy Solutions offerings include:
- Synergy Solutions for Sales and Marketing targets applications and productivity tools that support customer-facing processes. It provides company profiling, opportunity alerts, competitor monitoring, and account prospecting.
- Synergy Solutions for Anti-Money Laundering enables companies within the legal and financial sectors to quickly identify the risk level of a potential client with functionality to: review the corporate family structure of organizations, create an audit trail, check the background of a company's directors and shareholders, review financial filings and exchange listing details, choose pass/fail criteria for anti-money laundering tracking, and receive risk level classifications and direction on further analysis required.
- Synergy Solutions for Underwriter Risk Assessment enables insurance underwriters to manage the process of assessing the business risk of new and existing accounts. The solution incorporates detailed financial, executive, competitive, and industry information into two applications: an underwriter's packet for initial review and collection of information about a customer, and an underwriter's worksheet for collection of more detailed information.
The AppLink Pro SDK is priced at $25,000. Synergy Solutions are priced based on level of customization and scope of the consulting project. A license for the AppLink Pro SDK is bundled into the cost of a Synergy Solutions offering. Access to content in the OneSource Enhanced Information Warehouse is priced separately on a per-user annual subscription basis.
The Synergy Solutions are one of three primary product lines for the company. The company also offers Catalyst information modules (designed for rapid deployment with minimal customization) and the OneSource Business Browser family of Web-based business information subscriptions (available in various geographical editions). Business Browser provides integrated information on over 1.7 million public and private companies worldwide (with an additional 1.5 million company listings in the U.K.), plus nearly 6 million executives and hundreds of industries.
OneSource currently provides business and financial information to approximately 800 customers, including about 300 Global 500 organizations. Present customers include Accenture, American Express, AT&T, BankOne, Cisco, and KPMG. About 50 of the largest customers are using AppLink.
In addition to compiling its own information on private, high-technology companies (CorpTech), OneSource aggregates information and content from over 2,500 information sources supplied by more than 30 content providers, such as Comtex, D&B, Investext, and Multex. OneSource competes with other information providers, such as Hoover's, Factiva, and LexisNexis. While these companies also offer data on corporations, OneSource believes that it provides business professionals with "the perfect mix of quantity and quality business information in an easy-to-use format."