The software sector is set for more consolidation after accounting specialist Coda revealed it is in advanced sale talks with Unit 4 Agresso. Meanwhile, middleware specialist Software AG played down reports linking the firm with a sale to Hitachi, but it suggested that rivals could be sold this year.

Coda is a leading player in the UK financial management software market and is also developing on-demand software called Coda2Go that integrates with Salesforce.com. The firm said that if a deal were agreed, the resulting company would be in the top 10 of European software outfits.

Netherlands-based Unit 4 Agresso is best known in the UK for the Agresso enterprise resource management (ERP) subsidiary that targets mid-sized organisations. The firm counts EasyJet and several universities among its customers.

Unit 4 Agresso’s offer values Coda at £154m but some experts believe that is a low price and could tempt counter offers. One possible candidate could be Sage, which has been acquisitive for many years. Sage declined to comment on the rumours.
David Mitchell of analyst Ovum said he expected to see more merger activity among ERP players.

“Agresso is doing well in the UK public sector, particularly in local government where people hadn’t yet opted for an SAP or Oracle. There’s likely to be more consolidation and if there’s a macro recession, mergers and acquisitions will track that trend,” Mitchell said.

Both Coda and Agresso declined to comment further.

In other merger news, shares in Software AG leapt in response to the Hitachi acquisition speculation.

WebMethods, SeeBeyond, JBoss and Ascential have all been acquired in the past few years, boiling down the leading competition in middleware to giants IBM, Oracle and SAP, and specialists BEA Systems and Tibco.

However, Software AG chief technology officer Peter Kurpick said that the way the company is structured means it is far less likely to be acquired than others in the sector.

“We’re still standing alone because we’ve been successful in driving out stock and because the Software AG Foundation owns about 30 per cent of the company and wouldn’t want to sell,” he explained. “But I can easily see that [Tibco and BEA] will be gone [during 2008] and that makes our visibility greater.”