Compuware to acquire Covisint B2B exchange

Network World - Compuware Corp. today announced its intent to acquire Covisint Inc., the business-to-business exchange and Web portal used primarily by the automotive industry, for an undisclosed sum.
The deal, expected to be concluded in about a month, will end the financial involvement of General Motors Corp., DaimlerChrysler AG and Ford Motor Co., which launched the privately held B2B portal four years ago. Compuware Chairman and CEO Peter Karmanos said his company wanted to acquire Covisint because he's confident that revenue from its e-commerce portal products and services can grow from roughly $20 million per year to $100 million over the next few years.
Compuware, which offers product quality assurance, management tools and professional support services, intends to expand use of the Covisint portal, said Karmanos.
Covisint offers access to dozens of applications to auto industry suppliers and manufacturers. The auto industry messaging and document-delivery services will remain in place for the approximately 135,000 users in 95 countries that access them. But Compuware would like to expand the portal-based services to include other industries, including health care and financial.
Covisint Chairman and CEO Bob Paul is expected to remain head of Covisint, and Covisint employees are expected to join Compuware.
Paul said Covisint's board last year decided to begin looking for a buyer. In December, Covisint sold the online auction portion of its business to FreeMarkets Inc., and Covisint terminated its relationship with software provider Commerce One. Both Paul and Karmanos said the auction portion of the portal business didn't go over well with the automotive industry's suppliers, which felt squeezed by price markdowns in fast-paced online bidding.
"Nobody liked the auctions," said Karmanos, adding that it was the one mistake he could see in the Covisint business model.
Covisint and its portal have been slow to take off. The Big Three automakers launched it at the height of the dot-com era with hopes of a quick, lucrative initial public offering, but they often bickered over B2B services. DaimlerChrysler, General Motors and Ford also often left their suppliers confused about whether the B2B portal would replace their own online supply chain systems.
Nevertheless, Covisint has steadily gained momentum in adding applications and services, and according to Paul, it became profitable in May last year. While privately held Covisint has generally kept its financials under wraps, the company did disclose that has about $25 million in annual revenue.