SumTotal Systems, Inc. and Pathlore® Software Corporation, two leading enterprise software companies in the learning and business performance management market, today announced the signing of a definitive merger agreement for SumTotal to acquire Pathlore for approximately $48 million. At the closing of the acquisition, Pathlore shareholders will receive approximately $29 million in cash and 4 million shares of SumTotal Systems common stock. The merger reinforces SumTotal’s position as the largest software provider in the emerging learning and performance management market and is expected to provide its collective customers even greater resources for support and product innovation.
According to industry analysts, the acquisition brings together the leaders in revenue and customer count. The combination is expected to offer Pathlore customers access to SumTotal’s broader enterprise suite of product capabilities and expanded global support as well as extend SumTotal’s reach into key segments, including state government, health care, and the rapidly growing middle-market. The Pathlore customer base includes over 100 healthcare organizations, as well as government agencies in 38 of the 50 United States. Key benefits of the acquisition include:
Increased R&D capacity to bring new innovations to market more rapidly and economically
Enhanced global and vertical market support and delivery capabilities
Enhanced scale and stability with over $100 million in expected annualized revenue
Increased investment capability with approximately $10 million in expected annual cash flow
Expanded footprint with over 1,500 customers worldwide to drive industry roadmap
“After surveying our industry’s landscape, it became evident that Pathlore has a tremendous amount of momentum in complementary markets,” said Andy Eckert, CEO of SumTotal. “We believe that its growth, significant revenue base, and profitability profile could help us reach a critical threshold of revenue scale and profitability for our customers, partners and investors. With similar philosophies and cultures, complementary technology and offerings, and an unmatched footprint, we believe the combined company will be a true enterprise-class player in our industry with the scale to drive innovation and customer satisfaction in a profitable manner.”
“We believe the combination of these two strong companies will expand the scope of our operations and ensure that we will have the capabilities and financial strength to successfully serve our customers around the globe,” said Steve Thomas, president and CEO of Pathlore. “We believe strongly that this combination allows us to bring our customers significant value in terms of new capabilities and products. Given our large worldwide customer footprint, this combination meaningfully raises the bar for learning and business performance management providers.”
“The combined company’s number one priority will continue to be customer care and success,” said Eckert. “We will spend even more time on applications development and customer support. Both Steve and I believe that our integration plans and these increased investments will help ensure our customers’ success. We look forward to working with a broad team that represents the best of what both companies currently offer.”
