AppNet to buy 3 tech firms Companies in Md., Va., Mass. may aid presence in Internet commerce

October 27, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Taking the biggest step yet in its aggressive acquisition strategy, AppNet Systems Inc. will announce today the purchase of three high-technology firms that it hopes will help it become a major player in the burgeoning Internet commerce market.

AppNet is buying Laurel-based software and network-design firm Century Computing Inc.; marketing and consulting company NMP Inc. of Falls Church, Va.; and Research & Planning Inc., a Cambridge, Mass., inventory-management firm.

The three acquisitions are stock and cash deals worth more than $10 million each. All of the companies involved are privately owned, and the specific financial terms of the acquisitions were not disclosed.

The deals, which will go into effect immediately, are not expected to cause any job cuts, said executives of the companies.

Internet commerce, also known as electronic commerce or e-commerce, is the rapidly growing practice of buying and selling goods and services online.

Ken S. Bajaj, the chief executive officer, chairman and president of AppNet, said the purpose of today's acquisitions "is to build one of the largest e-commerce services companies."

Since its founding in November, AppNet has moved assertively toward that goal, buying Michigan software consulting firm Arbor Intelligent Systems Inc. in April and Potomac-based online catalog company Logex International LLC in May.

Such a spree costs money, of course, and AppNet got a large infusion of cash July 28, when Chicago investment firm GTCR Golder Rauner LLC pledged $100 million to the company.

On Aug. 31, AppNet hit the acquisition trail again, announcing its purchase of another Michigan high-technology firm, Software Services Corp.

Before the Arbor acquisition, AppNet had only eight employees. Including today's acquisitions, the firm will have about 500, of whom 110 are based in Maryland. Bajaj said AppNet takes in about $5 million in revenue each month, and expects to increase that to $9 million per month by year's end.

He added that AppNet's buying binge is probably not over. "We might be taking a few more big steps," he said. "Hopefully, by the end of November and at the end of December, we'll announce a few more [acquisitions]."

AppNet's growth reflects the general vibrancy of the electronic-commerce industry, which consulting firm International Data Corp. says will generate $400 billion in revenue by 2002.

"E-commerce is definitely hot and continues to be hot," said John Robb, an Internet industry analyst at Gomez Advisors Inc. in Boston.

One downside of the industry's torrid growth, Robb said, is the fact that demand for e-commerce workers far outstrips supply. "It's difficult to hire anybody nowadays, but a quick way to get bodies is to go out and acquire a firm," he said.

For their part, the acquired companies said they stand to gain from becoming part of a bigger player. The acquired firms will keep their former names for now, and will operate as divisions of AppNet.

"We think [AppNet's] vision of the future is right on target," said John McBeth, the president and chief executive officer of Century Computing. "Ken [Bajaj] is a really well-connected person in this business."

NMP President and Chief Executive Officer Jon Hallett said, "We see this as a way to gain leverage and gain speed. In today's market, scale in terms of depth and breadth is becoming more and more important. When a customer comes with a big project and wants the project in four weeks and not 12, we'll have the capacity to deliver."

Pub Date: 10/27/98

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