SunGard/AvantGard, the world's largest supplier of treasury workstations, announced last Friday that it had reached an agreement with XRT Corp., a subsidiary of France's Cerg Finance, to acquire XRT's two high-end workstation brands, TWS and Globe$. With that move, acquisition-happy SunGard, with headquarters in Calabasas, Calif., has again bought an erstwhile rival to expand its portfolio of treasury workstation products, shrinking the number of vendors while enhancing the potential of investment in upgrades.

While SunGard technically bought the U.S., German and Belgian subsidiaries of XRT, it actually acquired the TWS and Globe$ brands–XRT's high-end treasury workstation products, their customer base and the rights to market those products anywhere in the world, explains Ken Dummitt, president of SunGard/AvantGard. According to Dummitt, SunGard secured three valuable assets in the deal: a prestigious portfolio of customers, a staff of talented people and good products that “complement our present offerings.” While he suggests that SunGard is likely to stretch its AvantGard infrastructure umbrella to cover the new XRT products, he admits, “We know and respect those products from competing against them. You don't learn everything about a new product until you get under the covers with it. But at this point, we see the XRT products as filling in gaps among our other AvantGard products.” With these latest additions, “those gaps in our treasury applications are filled,” he adds.

Now, SunGard is focused on expanding its AvantGard footprint into the payment space beyond treasury operations and is considering a range of buy-versus-build decisions about how to expand that offering, Dummitt explains.

The loss of French-owned XRT came as little surprise. Many of the foreign-owned treasury software companies, XRT among them, have struggled to make sales in the less saturated U.S. market or have been absorbed by powerful domestic rivals in deals like Wall Street Systems' (WSS) purchase of French-owned Trema, Thomson's buy of the Canadian-owned Selkirk and SunGard's acquisition of British-owned Integrity. The rewards for SunGard are apparent: XRT still has many of the blue-chip clients that SunGard covets, observes treasury technology veteran Glen Solimine, CEO of financial technology provider Speranza Systems Inc. in Scarborough, Maine, and a former employee of both SunGard and XRT. “Culturally, it should be a good fit, and it will be great for XRT clients to have a vendor with a clear path forward,” Solimine says. “SunGard has a great client-support structure that XRT users will appreciate.”

XRT was once a dominant player and still has good clients in the U.S., notes Mike Gallanis, a principal at Treasury Strategies Inc. Since XRT was acquired by Cerg, its greatest success has come in French-speaking countries, and by spinning off U.S. operations, Cerg may be choosing to focus on that core business, he speculates.

Snapping up XRT is a much-practiced move for SunGard. It has been the treasury technology giant's enduring strategy to acquire treasury software providers and attach them to its “formidable infrastructure,” notes Maggie Scarborough, research manager for corporate banking at Financial Insights. “When they can pick up a company for a relatively cheap price, they usually do.” Indeed, SunGard has prospered by acquiring and merging two or three competitors, using that scale advantage to weaken its rivals in market competition and then buying those faltering rivals at attractive prices and adding further to its scale advantage.

For SunGard, the XRT portfolio also represents a ticket to better global credentials, an important factor when it faces WSS in competitive bidding, TreaSolutions President Dan Carmody says. “Once SunGard learns what XRT customers require, they should be able to migrate them over time to the most appropriate SunGard upgrades,” he explains. If SunGard, as expected, incorporates the best features of XRT systems into its cross-platform AvantGard functionality, it will have another set of tools to attract potential new customers, Carmody points out.

With the XRT acquisition, Scarborough observes, the vendor ranks have thinned to just four major players: SunGard, Wall Street Systems, Simcorp and Thomson. “After that, there are just a few smaller players–Kyriba, Chesapeake Systems, Misys and the remnants of Gateway,” she points out. Thomson is selling the system it acquired from Selkirk “like gangbusters” to the middle market and the low end of the large corporate market, while WSS and Simcorp focus on large, sophisticated treasuries and SunGard has “something for everyone,” she reports.

At almost the same time SunGard was acquiring XRT, State Street Bank was acquiring Currenex, a foreign exchange portal. State Street already owns FX Connect, so consolidation drivers continue to work across the treasury technology spectrum.

Instant Insights /

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