July 11, 2005

PTC wants to acquire B2B document management software company Arbortext for $190 million in cash.

The deal is part of PTC's goal of "acquiring strategic companies to build a complete enterprise PLM system," according to an AMR Research alert. "Arbortext should help PTC further complete its expansive PLM system by significantly enhancing its documentation abilities."

AMR thinks that documentation (as that of catalogs and manuals for products, services and training) has grown in importance "as products increase in complexity and decrease development time."

The acquisition of Arbortext is also an entry into process manufacturing, which has historically been under-penetrated by PLM. "PTC will have many of the necessary tools to enter the process manufacturing market as labeling, regulatory submissions, and clinical reporting are core components of an effective system," notes AMR.

Of course, documentation has an important role in discrete manufacturing in well, where PTC has a more established play.

Going outside that sphere via the Arbortext deal carries some inherent risks, warns AMR. " Further, a significant portion of [Arbortext] revenue is outside of the traditional PLM world, focusing on publishing and financial services...this provides an opportunity, but it can also provide a distraction that PTC can not afford."

Source: Line 56