Captiva/ActionPoint Merger Raises Hopes, Doubts

Seizing an opportunity to provide corporate clients, including insurers, with a comprehensive integrated document technology solution, forms processing vendor Captiva Software Corp. (San Diego) and information capture solutions provider ActionPoint (San Jose, CA) have signed a definitive agreement providing for the merger of the two firms. The new entity, which had combined 2001 revenues of $45 million and more 300 employees worldwide, will operate as a public company under Captiva name.

Having been technology partners since 1998, the two companies' complementary expertise in structured and unstructured information capture will result in an "ideal combination" in the information capture software market, according to Reynolds Bish, president and CEO of Captiva, who will take on those same duties at the new company. "By combining our industry-leading products and services we see a rare opportunity to deliver our customers what they've been asking for-a complete, integrated solution from a single source," Bish says.

Captiva and ActionPoint together count more than 400 Global 2000 customers and government clients. Insurance clients using the firms' products include Empire BCBS, Aon, USAA, Cigna, Humana and MetLife.

Building upon their partnership endeavors, the firms will seek to further integrate the FormWare and the InputAccel systems, respectively Captiva's and ActionPoint's flagship products, according to Bish. However, each operation will work chiefly in a complementary fashion from a managerial perspective, a strategy reflected by the new entity's identification of the San Diego and San Jose locations as dual headquarters. ActionPoint's current chairman, Kim Hawley, will continue as non-executive chairman of the combined company. Steve Francis, president and CEO of ActionPoint, will serve as chief operating officer of the new Captiva, with a focus on integrating and managing the companies' services and software development operations.

Bish asserts that the deal will give the new Captiva an undisputed market leadership position, with "more resources and a more robust suite of proven products than any other competitor," he says. "Our nearest competitors-Readsoft, Cardiff and Kofax-will be about half our size, while all others will be about one-quarter our size." Bish expects that about 30 percent of the company's revenue will come from insurance and says that the firm will remain focused on that vertical's needs.

However, some industry observers express skepticism about the value of size and whether the two firms' products work well together. Furthermore, while Captiva turned a profit last year, it carries a heavy debt load. That fact, combined with knowledge that ActionPoint has been performing less well, but is cash-rich, suggests a marriage of convenience between two troubled partners, observers suggest. "Neither company is going anywhere on its own, so there seem to be some positive aspects to this deal," contends Ralph Gammon, editor of Document Imaging Report (Erie, PA). "Captiva gets out of debt and ActionPoint gets some needed direction and leadership."

Gammon is of the "size matters" camp and sees further value in the synergies between the two companies. Given the complementary nature of their offerings, "In a $300 million marketplace they've potentially created a market leader. There is some leverage that they can add to the market, there are lots of similarities in their technologies, so they may be able to do some creative things," he says.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio