Merger mania hit the higher education technology market again Thursday, as the leading provider of learning management systems, Blackboard, Inc., said it would acquire its top competitor, WebCT, Inc., for $180 million. When the two join forces in the next few months, the combined company will bear the Blackboard name but continue to support both companies' products for the foreseeable future, to keep disruption to current clients to a minimum, the two companies said.
The announcement, which came late in the day on Wednesday, surprised many higher education technology experts, although most of those reached said the merger made sense in a market in which the two leading players each have relationships with between 40 and 50 percent of colleges, according an estimate by Eduventures, an education analyst. The announcement by the two companies said that together, they would have about 3,700 clients, many of which are colleges and universities.
"When you've see penetration rates for the two big players like that, it seems inevitable that -- especially for a public company like Blackboard -- sometimes the only way one is going to grow at the exponential rate expected is to gobble the other up," said Cathy Burdt, Eduventures' lead analyst for postsecondary solutions.
For college technology officials still dealing with the aftermath of last year's high-profile merger between Oracle and Peoplesoft, the Blackboard/WebCT announcement is likely to cause at least a few jitters. But officials of both companies sought to emphasize their intent for a smooth transition aimed at creating a unified "community of practice," a phrase repeated several times in the news release and a teleconference held by Blackboard officials.
Blackboard's Web site included a separate page, entitled "Blackboard's Client Commitment," that said the two companies would seek to retain 100 percent of their clients, "develop, innovate, upgrade, improve and support both Blackboard's and WebCT's products," and "over time," develop a new product incorporating the best of both companies' work.
"This merger makes tremendous sense for our clients, shareholders and employees," said Michael Chasen, Blackboard's president and chief executive officer. "It marks an unparalleled opportunity for two successful, mission-driven organizations to unify with a singular focus on being the premier partner and platform for educators on a global basis."
Added Carol Vallone, Chasen's counterpart at WebCT: "Both companies are passionate about the academic market and, alongside our respective clients, have truly pioneered the category together. Given the alignment of our visions, technologies, and overall strategies, the combination of our two companies will advance the teaching and learning technology industry, benefiting customers worldwide."
Although Blackboard also offers enterprise software for colleges' backend operations, it, like WebCT, is known first and foremost as a platform through which institutions offer academic courses online. The two companies emerged as the survivors (and thrivers) from amid numerous competitors in the late 1990s and early part of this decade.
Although there are numerous remaining proprietary players, including eCollege, as well as an emerging cadre of open source platforms for course management, such as Moodle and Sakai, the combined Blackboard/WebCT entity is likely to control as much as two-thirds of the e-learning market, says Burdt of Eduventures.
Reaction to the merger announcement among campus technology experts was mixed. On his blog, EdTechPost, Scott Leslie, an education technologist for the Learning Resource Center at BCcampus, an online portal in British Columbia, headlined his first post "Holy $#@! -- Blackboard and WebCT to Merge": "Well, there goes any claim to being an insider! Just found out about this a few minutes ago and had no idea it was in the works.... You kind of knew something like this had to happen, but still it's profoundly shocking now that it has." He noted that WebCT had just begun promoting the newest version of its software, Campus Edition 6.
Other commentators wondered how long it would be before WebCT's products were phased out entirely, and how quickly the combined company's prices would rise, if it holds off the open source challenges and expands its presence in the market.