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EXHIBIT 99.1
LEADING HIGH TECHNOLOGY CONSORTIUM CONVERGE, INC. TO ACQUIRE NECX FROM
VERTICALNET
CUPERTINO, Calif., and HORSHAM, Pa., - December 19, 2000 - Converge,
Inc. (formerly known as eHITEX), the leading high technology marketplace, and
VerticalNet, Inc., the Internet's leading e-business enabler, announced a
definitive agreement for Converge to acquire NECX, a wholly-owned subsidiary of
VerticalNet. NECX operates a global trading exchange that matches buyers and
sellers of electronic components and computer systems, and trades in excess of
$1 billion annually in North America, Asia and Europe. Converge also announced
that it has chosen VerticalNet Solutions, a division of VerticalNet, to provide
the technology backbone for its trading operations. As a result of the
acquisition agreement, VerticalNet will receive a 19.9% equity interest in
Converge and a seat on its Board. The companies expect the acquisition to close
during the first quarter of 2001.
"The acquisition of NECX establishes Converge as the global trading
leader, making markets in over 180 product families, with logistics and
operational capability to buy, sell and move products around the world," stated
Robert Lewis, CEO of Converge, Inc. "NECX brings 20 years of domain expertise
and is a trusted intermediary for the thousands of high technology companies
worldwide. The commitment of our founders, the recent delivery of our first set
of collaboration tools and the addition of NECX's on-line trading capability and
infrastructure moves us into an era of true value creation for companies
throughout our industry."
Converge was founded in May, 2000 by 15 leading high technology OEMs,
contract manufacturers, component manufacturers and distributors to deliver
supply-chain efficiencies using Internet technology. "This industry depends on
the collaboration of hundreds of companies to bring high-value products to
market," explained Lewis. "Our mission is to reduce our founders' $200 billion
annual cost of direct materials by five to 10 percent over the next three years,
using a straightforward approach -- build deeply liquid markets for direct
goods and services, offer new collaboration tools to improve efficiency and
operate a confidential, trusted environment."
"Our equity ownership in Converge enables VerticalNet and its
shareholders to continue to benefit from our leadership position in the
electronics component marketplace," said Joe Galli, CEO of VerticalNet. "In
addition, our agreement to provide Converge with our direct material procurement
technology securely positions VerticalNet Solutions as the emerging leader in
this high-growth sector and accelerates our go-to-market initiatives. This will
sharpen our focus on VerticalNet Solutions and on VerticalNet Markets, our
strategic business unit that operates 58 industry-specific marketplaces,"
continued Galli. "Focusing on these two complementary businesses will enable
VerticalNet to continue our rapid growth trajectory while driving us toward
profitability."
Carly Fiorina, Chairman, President and CEO of Hewlett-Packard Co.
commented, "The founders of Converge came together to transform the
high-technology industry by wringing out the inefficiencies in manufacturing and
supply chain management. Since beginning this marketplace, Converge has
maintained an unmatched leadership position. The acquisition of NECX is
significant for the industry, because it offers members a critical mass of
participants and volume in a single exchange."
In a separate agreement, Converge has entered into a three-year
software licensing and professional services contract with VerticalNet, valued
at $107.5 million, whereby the VerticalNet Solutions platform will serve as the
technical backbone for Converge's trading operations. Today's agreement with
Converge advances VerticalNet's position as the leading software provider in the
direct material procurement space. An additional component of the agreement
includes a
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commitment to link Converge with each of the fourteen technology-focused
verticals in VerticalNet Markets, thus creating a "linked web" of content,
community, and commerce between VerticalNet and Converge.
According to Lewis, "An important element of our interest in
VerticalNet Solutions technology was their successful implementation of their
solution at NECX. VerticalNet Solutions has created a best-of-breed trading
platform that meets the requirements of direct procurement. We are pleased to
announce that Converge will license this technology and continue to work with
VerticalNet to enhance and extend their platform."
Lehman Brothers Senior Research Analyst Neil Herman said: "The winner
in direct procurement will be the winner in procurement overall. The direct
procurement market is much larger than indirect and the complexity of the
problem is much broader -- requiring deep integration into the industry value
chain. Given the complexity of direct procurement in electronics, the player who
solves this problem is poised to address the issues of any industry."
Tom Berquist, leading Internet industry analyst with Goldman Sachs
said: "This confirms our view that industry-led exchanges will emerge as viable
businesses and evolve into industry operating platforms that serve the trading
and collaboration needs of specific supply chains. We continue to be impressed
with the speed at which Converge is assembling the necessary assets to establish
itself as a leading example of this emerging business model."
Larry Marshall, President and CEO of NECX said: "The acquisition
represents a real win for our employees and our customers. It will allow us to
continue to aggressively build out our international capabilities and enable us
to offer a broader set of services to our customers. We have long believed that
the market would consolidate around leaders who could deliver collaboration
services, business services such as logistics and robust trade capabilities. We
look forward to applying our deep domain skills and innovative systems to
accelerate the success of Converge."
As a joint venture partner with VerticalNet in NECX Asia, Sumitomo
Corporation, a major integrated trading house, will join the 15 founders of
Converge as a shareholder, expanding the commitment of Asia-based companies to
Converge.
Atsushi Nishijo, Managing Director, Sumitomo Corporation, said "As a
global trading company, we try to enhance the supply of parts and fulfillment
services worldwide, most especially in Asia. We are pleased to see this next
step in the B2B model, and expect NECX to add to Converge's strong momentum
throughout Asia."
VerticalNet CEO Joe Galli will become a member of the Converge Board of
Directors and Sumitomo will take an advisory board seat.
VerticalNet will be hosting a conference call for financial analysts
and others scheduled for today at 5:00 p.m. EST. To participate in the call dial
1 877-917-3618 (International 712-271-0851), pass code - VerticalNet, speaker -
Joe Galli. A 72 hr. replay will be available by dialing 1-888-568-0647
(International 402-998-1535). The conference call will also be Webcast "live"
at: www.vcall.com
About Converge, Inc.
Converge (http://www.converge.com) is the independent online marketplace where
high-technology industry buyers and sellers connect, collaborate and transact to
increase supply-chain efficiencies. Converge (formerly known as eHITEX) received
$100 million in funding in June, 2000 from its founders: Agilent Technologies
(NYSE: A), AMD (NYSE: AMD), Canon (NYSE: CAJ),
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Compaq (NYSE: CPQ), Gateway (NYSE: GTW), Hitachi (NYSE: HIT), Hewlett-Packard
(NYSE: HWP), NEC (NASDAQ: NIPNY), Quantum (NYSE: DSS), Samsung Electronics (OTC:
SSNIF), SCI Systems (NYSE: SCI), Solectron (NYSE: SLR), Synnex (privately held),
Tatung (TAI: 2371.TW) and Western Digital (NYSE: WDC). For more information
about Converge, please call (877) 693-5694 or (310) 231-6958 (outside US), or
send inquiry via email to: [email protected]
About VerticalNet, Inc.
VerticalNet, Inc. (Nasdaq: VERT) (www.verticalnet.com), the Internet's leading
business-to-business e-commerce enabler, provides end-to-end e-commerce
solutions that are targeted at distinct business segments through its strategic
business units - VerticalNet Markets and VerticalNet Solutions. VerticalNet
Markets provides value to buyers and suppliers by offering trade relevant
content, marketplaces, and enablement services through its 58 industry-specific
VerticalNet(R) Marketplaces. VerticalNet Solutions delivers the most
comprehensive digital marketplace solutions available to industry alliances,
global 2000 enterprises, Net market makers, VerticalNet Markets and VerticalNet
Exchanges. VerticalNet International leverages the Company's strategic business
units to create global Internet B2B marketplaces, offering products and services
internationally and partnering with companies that have strong local presence
and domain expertise.
About NECX
Based in Peabody, MA, NECX established the first and largest open-market trading
exchange for the purchase and sale of electronic components, computer products
and networking equipment. NECX provides a high degree of market liquidity by
aggregating supply and demand from thousands of component, original equipment
and contract manufacturers; as well as distributors and resellers. The Exchange
provides comprehensive services such as procurement and inventory management,
trading, financial settlement, as well as global logistics and quality
assurance. In addition to its domestic operations, NECX has Asia-Pacific
operations in Singapore and European operations in Galway, Ireland and
Stockholm, Sweden. ###
VerticalNet and NECX are registered trademarks and/or trademarks of Vertical
Tech LLC in the United States and/or other countries. This announcement contains
forward-looking statements that involve risks and uncertainties, as well as
statements that are preceded by, followed by or include the words "believes,"
"plans," "intends," "expects," "anticipates," or similar expressions. For such
statements, VerticalNet claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. Actual results may differ materially from the results predicted,
and reported results should not be considered as an indication of future
performance. Factors that could cause actual results to differ from those
contained in the forward-looking statements include matters relating to
technology, performance and operation; rapid technological and market changes;
potential intellectual property and licensing issues; as well as those factors
set forth in the each company's Annual Report on form 10-K for the year ended
December 31, 1999 and the Company's Quarterly Report on form 10-Q for the
quarter ended September 30, 2000, both of which have been filed with the SEC.
