CodeGear's white knight
By SD Times News Team
June 1, 2008 —
(Page 1 of 2)
It’s the best thing that could happen to CodeGear, Borland’s developer tools division. The future of the tools business had been in doubt since February 2006, when the company began talking about selling it off. It’s been an on-again, off-again transition: Sometimes the tool group was for sale, sometimes it wasn’t. Borland’s top management changed its mind so often, frankly, that it lost nearly all credibility.
When Borland spun the tools business into a wholly owned subsidiary, CodeGear, in December 2006, many industry observers speculated that Borland was merely preparing it for a sale after all, with advisers at investment firm Bear Stearns reportedly setting a price of US$150 million. Despite protestations to the contrary, that turned out to be the case, but not in the way Borland had hoped.
What was surprising was the identity of the buyer: Embarcadero Technologies, a well-regarded maker of database tools. Embarcadero had flown under most analysts’ radar screens, even after being picked up by Thoma Cressey Equity Partners in late 2006. Equally surprising was the low, low sale price: $23 million.
This sale is good for both CodeGear customers and the industry. Thoma Cressey wants to grow its new developer tools business. That means customers will see investment evolutionary changes in products such as JBuilder, Delphi and C++Builder, as well as its PHP and Ruby tools. Unlike other potential buyers, Embarcadero has no hidden agenda. Management has little reason to kill profitable product lines or morph the CodeGear offerings into platform-specific tools that turn away loyal customers.
Consider the alternatives. Borland might have held onto CodeGear, making minimal investment while trying to make the numbers look attractive to buyers. The lack of investment and planning would have destroyed the business; at some point, Borland would have just shut it down.
Another alternative would have been the sale of CodeGear to a platform maker, like Oracle, SAP or Sun. Such a company would have little reason to maintain the breadth of CodeGear offerings and would have naturally bent the CodeGear tools to fit a broader platform objective. Given that CodeGear’s primary appeal was that it was a pure-play tool maker without platform dependencies, this also would have destroyed its value.
Related Search Term(s): CodeGear, Embarcadero
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