Auto industry exchange sets deals with Commerce One, Oracle

Following on the heels of its legal incorporation, the business-to-business exchange set up by the Big Three automakers this week formally announced separate licensing and equity deals with Commerce One Inc. and Oracle Corp., the two vendors that were given the lead roles in providing the software needed to fuel the auto industry marketplace.

On Tuesday, the Covisint LLC exchange detailed an agreement with Commerce One under which it will use the Pleasanton, Calif.-based vendor's MarketSite software to process procurement transactions between marketplace participants. Covisint said it also has licensed Commerce One's desktop procurement application and its online auction and catalog content software.

That was followed yesterday by an announcement with Oracle in which Covisint said it will use that company's Exchange Marketplace software to provide capabilities such as security, single sign-on, registration and pricing. In addition, Covisint plans to install Oracle's enterprise resource planning applications to run its internal business operations.

Covisint officials said neither Commerce One nor Oracle holds a lead position over the other as a technology supplier to the exchange. Commerce One was brought into Covisint by General Motors Corp., while Oracle had initially teamed up with Ford Motor Co. The two automakers originally planned to build competing procurement marketplaces, but they decided in February to combine on a single exchange along with DaimlerChrysler AG.

Ten months after being formed, Covisint on Monday said it had finally become legally incorporated -- a process that was delayed while the U.S. Federal Trade Commission and the German government conducted antitrust-related reviews of the B2B exchange's business plans (see story). Covisint received clearance from both governments two months ago and then began hammering out a complex arrangement that divides ownership between a total of seven companies.

The deals with Oracle and Commerce One include equity stakes of 2% in Covisint for each vendor. The exchange this week also officially gave equal, but undisclosed, ownership shares to the Big Three, which have put up a combined total of at least $200 million and contributed workers to get the fledgling marketplace off the ground. Also holding stakes in Covisint are Nissan Motor Co. and Renault SA, which signed on after the exchange was formed.

As part of the agreement between Covisint and Commerce One, the software vendor issued 14.4 million shares of its stock to both Detroit-based GM and Dearborn, Mich.-based Ford -- giving the automakers a combined ownership position of 14% in Commerce One. Half of the shares will be held in escrow until next December pending the satisfaction of unspecified conditions included in the deal with Covisint, Commerce One said.

Ford and GM also agreed to "standstill" restrictions that limit their ability to buy more of Commerce One, which is converting itself into a holding company as part of the arrangement. Oracle, meanwhile, said it wasn't swapping any stock with the automakers in return for its equity stake in Covisint.

Rico Digirolamo, a GM executive who is working as Covisint's interim CEO, said more than $1.5 billion in business has been funneled through the online marketplace since it went live in October. Most of those transactions have been processed through Commerce One's MarketSite software, Digirolamo added.

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