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Siebel to acquire Onlink
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August 8, 2000: 2:25 p.m. ET
Company to pay $600 million in stock for commerce software firm
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NEW YORK (CNNfn) - Siebel Systems, a rapidly growing maker of sales, marketing, and customer service software, said after the close Monday that it had agreed to acquire OnLink Technologies, a small maker of applications for interactive marketing and customer service over the Web, for about $600 million in stock.
Siebel (SEBL: Research, Estimates) will issue 3.7 million of its shares for privately held Onlink, an amount equal to about $600 million at Monday's closing price for Siebel stock. Siebel is paying a hefty premium for Redwood City, Calif.-based OnLink, which had revenue of only $4.7 million in the first six months of this year and recorded a net operating loss of $13.4 million for the period. The acquisition also is a bonanza for the venture capital firms that invested $37 million in the company, including Sierra Ventures, GE Equity, and Berkeley International Capital.
Companies such as General Electric Co. use OnLink applications on their Web sites to help customers make decisions about various product configurations that are available. As an example, the software could help consumers decide which CD-ROM drive, RAM, hard drive, and processor to combine on a custom-configured personal computer.
Siebel is paying for OnLink with its very richly valued stock. At a recent price of 173, Siebel's stock is seven times higher than its 52-week low and sells for an astronomical 357 times its trailing 12-month earnings, and more than 200 times what analysts expect it will earn this year.
 At the same time, San Mateo, Calif.-based Siebel announced that it will split its stock 2-for-1 for stockholders of record on August 18, 2000, payable on Sept. 8, 2000. Siebel stock rose 8-1/8 to 172-5/16 Tuesday afternoon, largely in response to the stock split announcement.
CIBC World Markets analyst Melissa Eisenstat estimates that Siebel's revenue will double to $1.58 billion in 2000 from $799 million last year. She expects the company's net income to rise this year to $211 million, or 83 cents per share, from $114.5 million, or 51 cents, last year.
"Although Siebel is paying a hefty premium for this small company, its large market cap should enable it to absorb this acquisition with modest dilution this year and none next year," Eisenstat said in a research note issued Tuesday. 
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