ISACSOFT (http://www.isacsoft.com), a public company headquartered in Montreal, will acquire privately held BiblioMondo in a transaction valued at roughly CDN $13 million (about $10 million U.S.) in September 2004. This acquisition is the latest in a series, and the largest in value to date, increasing the size of ISACSOFT to a market value of about CDN $70 million (about $54.3 million U.S.). BiblioMondo, prior to the acquisition, was a private company with significant investments by venture capital firms. In its acquisition, ISACSOFT buys out the interests of the private venture capital firms. The founders of BiblioMondo, Jean-Pierre Théorêt and Ian Farquharson, who held equity ownership of that company, now become shareholders in ISACSOFT. The management and operation of BiblioMondo will remain intact with BiblioMondo management taking senior management positions in ISACSOFT.

BiblioMondo and ISACSOFT, though both involved in technology products and services, have overlapping customers but not products. BiblioMondo specializes in library automation systems for public libraries while ISACSOFT's business interests focus on interactive learning programs or courseware and translation and localization services for educational institutions, government agencies, and corporations. The key strategy behind this merger lies in the potential complementary relationship between the two companies' business interests. ISACSOFT sees BiblioMondo as a company that can help it in marketing its products and services to new market sectors. By virtue of its existing customer base in metropolitan libraries in Europe and the U.K., BiblioMondo gives ISACSOFT exposure in these markets for its e-learning products and services.

For BiblioMondo and its customer libraries, the merger with ISACSOFT does not imply a major change in product options and strategy. This situation differs from many of the previous mergers in the library automation arena that involve a merger of direct competitors. When two library automation companies merge, the typical result involves the demise of one of their products. Such is not the case with this merger. By virtue of being part of a larger company, BiblioMondo benefits from increased resources for development, marketing, and support.

BiblioMondo has long attempted to strengthen its presence among U.S. libraries. Previous efforts at marketing its products south of the Canadian border have yielded small results, with only about a dozen U.S. libraries running one of BiblioMondo's automation products. The company, however, remains committed to the strategy, and the merger with ISACSOFT may give it some of the momentum it seeks. BiblioMondo has previously stated its intent to enter the U.S. market through a business acquisition. This option remains even more of a possibility with BiblioMondo as a part of ISACSOFT, a company eager to expand through strategic acquisitions.

Company Backgrounds
Ronald Brisebois was founder and CEO of a company called COGNICASE that was acquired in a hostile takeover by CGI, Canada's largest computer services company, in January 2003. At the time of the acquisition, COGNICASE had revenues in excess of CDN $500 million (about $319 million U.S.) and employed about 4,800 people throughout North America. The acquisition of COGNICASE by CGI resulted in a larger competitor eliminating a smaller one in a transaction valued at CDN $347 million (about $221 million U.S.). At the close of the acquisition, CGI appointees replaced the senior officers of COGNICASE, including Brisebois.

Following the acquisition of COGNICASE, Brisebois launched a new company, which is now known as ISACSOFT, in April 2003. Brisebois serves as ISACSOFT's president and CEO and chairman of its board of directors. The purchase of BiblioMondo by ISACSOFT is but the latest step in a series of strategic business acquisitions designed to assemble a company well positioned to compete in various technology-oriented business sectors. In less than 18 months, Brisebois has led the company through seven strategic business acquisitions.

BiblioMondo's corporate history is traced through a number of companies, all related to its original founders, Ian Farquharson and Jean-Pierre Théorêt. BiblioMondo has both historical corporate ties and technological ties to a company called Speedware. Speedware was founded by Farquharson and Théorêt in 1976 under the name Info-Boutique, which later became Infocentre Corp. The company specialized in the development of industry-specific software applications using its fourth-generation language named Speedware. One of its divisions created the Best-Seller library automation system. In 1986, the library management division of Infocentre Corp. was spun off into a separate company called Best-Seller, Inc. The founders of Speedware continue to be involved in both companies. Théorêt serves as the chairman of the board of BiblioMondo and chief technology officer of Speedware.

Perspective and Analysis
The acquisition of BiblioMondo by ISACSOFT follows a relatively quiet period in the library automation arena. No major mergers or acquisitions have occurred since the takeover of DRA by Sirsi Corp. in August 2001.

At least two potential acquisitions have been averted. Both SIRS and Gaylord sold their major corporate assets yet retained their library automation divisions. These events might suggest that we live in a business climate where the seller's valuations of automation companies are not favorable relative to their market value.

Yet, in a broad business climate that favors large companies, the library automation arena continues to be unusually fragmented. The current landscape where dozens of companies compete within a mere $500 million market seems destined to see some consolidation.

The acquisition of BiblioMondo by ISACSOFT bears similarities to the acquisition of Endeavor by Elsevier Science that occurred in April 2000. In both cases, a private company was purchased by a larger public company with interests in a separate, but related, industry. Elsevier Science, a major publisher of scientific, medical, and technical (STM) journals, found Endeavor's expertise in library automation and digital library systems complementary to its business interests. Likewise, it's easy to see affinities between e-learning and library-oriented technologies. As ISACSOFT builds itself out to form a company that offers products and services centered on "knowledge technology," it seems natural that library automation systems, including portal and metasearch products, would be important elements.

One of the key trends today involves an increased level of intersection among product areas. Library automation cannot develop in isolation of courseware systems, e-learning environments, e-government infrastructure, and the like. The acquisition of BiblioMondo by ISACSOFT reminds us that at least part of the consolidation in the library automation marketplace may come through the assimilation of companies by external industries.

As part of a larger and growth-oriented company, BiblioMondo is positioned to become a more dominant player. We may also be nearing the end of the quiet period of mergers and acquisitions involving library automation companies.