ATG Will Acquire eStara
The company will beef up its on-demand initiatives through the acquisition with capabilities that are particularly attractive to retailers.
Posted Sep 20, 2006
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ATG disclosed on Tuesday that it intends to acquire eStara, a provider of VoIP-enabled click to call, click to chat, and call tracking offerings, in a stock-and-cash transaction valued at up to about $48.3 million. The Web self-service and e-commerce player will acquire all outstanding common stock, preferred stock, and vested and unvested stock options of eStara for roughly 15.3 million shares of ATG common stock, $2 million in cash, and up to an additional $6 million in earn-out potential. The deal, which is subject to customary closing conditions (including the approval of eStara's stockholders) is expected to close in Q4 2006.

ATG intends to leverage eStara's on-demand approach to expand its on-demand initiatives: "We will embed the eStara offerings into our existing ATG OnDemand offerings for commerce and customer care," Bob Burke, president and CEO of ATG, said during a Tuesday conference call. "The eStara value proposition fits perfectly with ATG's strategy of helping our customers create demand, improve conversion rates, and enlarge average order size, as well as providing excellent customer care." He added that eStara's solutions can be used by existing ATG customers running ATG solutions on premise or via ATG's on-demand services. "Since the eStara solutions are on demand they can be utilized by non-ATG customers as well, thus enabling us to target a broad range of prospects that are not ATG customers today," Burke said. Between eStara and ATG's client rosters there's less than 3 percent client overlap.

EStara's flagship offering, Click to Call, allows online consumers to connect immediately to a salesperson or CSR for help with making an online purchase or to request more information, for example. Web-site users click on an HTML button embedded in a site and talk directly from their PC to a company representative or enter their telephone number for a callback. The product also allows agents and sales reps to push Web pages out to customers. Other solutions within eStara's product portfolio include Click to Chat and Call Tracking, a tool that helps companies track inbound telephone responses to print and online promotional campaigns.

The deal enhances ATG's ability to provide cross-channel service and help customers with a variety of activities, according to Mitch Kramer, senior vice president and analyst at Patricia Seybold Group. Customers want to interact via the channel of their choice at "any stage of the customer life cycle," he says.

Zachary McGeary, associate analyst at Jupiter Research, takes a similar stance: ATG customers benefit by having another choice for facilitating customer interactions, while eStara customers now potentially have access to ATG's underlying technology, Wisdom, which should facilitate a more complete view of the customer, he says. "Similarly, ATG customers will be able to leverage what they know to more strategically deliver click-to-call/chat interactions."

But one hurdle ATG faces is encouraging continued adoption of this technology, McGeary says. "Many companies are stuck in contact deflection...and [are] hesitant to invite contacts via real-time touch points such as voice and chat."

From a competitive standpoint, however, other e-service vendors like KANA, Knova Software, RightNow Technologies, and Talisma should watch the deal the closest. "I wouldn't be surprised if we saw some developments in click-to-call from these guys moving down the line. The only problem is, they now have one less partner to consider, in a space with really only one player (two if you consider LivePerson)," McGeary says. "That is very limiting to these vendors and any potential plans they may have had to offer this functionality."

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