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Altra Throws TransEnergy into Shopping Cart

Altra Throws TransEnergy into Shopping Cart

Not to be outdone by its integrated energy industry brethren, the energy transaction software industry is also encountering its fair share of consolidation. Altra Energy announced its third major acquisition of the year Monday, as the Houston-based software provider entered into a definitive agreement to purchase TransEnergy. Terms of the agreement between the two private companies were not disclosed, but Paul Bourke, Altra's CEO, said the combined company's annual revenue will grow into the $50 to $100 million range.

"The combined companies' numerous software installations, together with more than 1,200 users of the Altrade T electronic trading system, establish the overall company as the preferred choice for energy trading, transmission and transportation e-commerce-based business solutions," Bourke said. "Through the integration of these processes, we are helping to create an energy marketplace in which transactions are consummated and scheduled via the Internet."

Starting this week, Altra will halt the marketing of all TransEnergy products, including the popular TransEnergy Gas Manager. "Our sales team will only focus on Altra products from here on out," said Mara Van Nostrand, an Altra spokesperson. "People who have just recently bought TransEnergy products will get the same customer support and service they expected, but our team will no longer actively promote TransEnergy material."

Rusty Braziel, Altra's chairman of the board of directors, said the acquisition has more to do with the gain of expertise than the gain of assets. "The most important thing in this combination of the two companies is the expertise of the people."

At one level or another, merger talks between the two companies had been thrown around for four years, Braziel said. The talks became serious negotiations in 1998. The merger occurred one month after TransEnergy performed a major restructuring effort that included a 20% staff reduction. Mike Montgomery, TransEnergy's CEO, said those layoffs, which affected every department except customer service and research and development, were not executed in anticipation of this merger.

Instead, Montgomery said the merger was the result of the two companies' shared goal "to be the leading provider of transaction management and risk software in the wholesale sector of the energy industry. We have both long recognized that there would be a natural fit between our companies that would capitalize on our shared synergies."

Bourke said limited layoffs have already occurred at both companies and that no more are expected. TransEnergy's staff will move into Altra's downtown Houston headquarters by the end of the year.

Altra began its buying spree earlier this year with the January acquisition of its main competitor in the electronic trading platform market, Quicktrade. The company combined trading platforms last month, forming Altrade. Mark Crosno, president of Altra Electronic Trading Services, said since the Quicktrade merger, the top 75 traders on the system (in terms of volume traded) have been retained and the company has actually increased its client base. Altra also bought a large risk management software producer, Energy Imperium, last March.

Bourke said Altra has a lot to offer TransEnergy customers. "We are aiming for a 100% client retention rate from this deal, but only time will tell...Our hope would be to convince an El Paso or a Williams (both TranEnergy software customers) that from a talent point-of-view and a financial strength point-of-view they should feel better about their situation now than they did [before the merger]."

It is too early to tell if the next upgrades to Altra's software will incorporate TransEnergy's features a functionalities, Van Nostrand said. Altra is scheduled to release an update of its gas management software by the end of this year.

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