Robotic Process Automation (RPA) pioneer Blue Prism has made a bold move to respond to the increasing competition from its highly funded, privately held rivals with its first acquisition, of RPA-as-a-Service partner Thoughtonomy. Subject to certain conditions, the deal is expected to close by the end of July 2019.
U.K.-headquartered Blue Prism is paying £80 million ($100 million) in cash and shares for its friend, and sometime rival, Thoughtonomy. Also U.K.-based, Thoughtonomy is run by Founder/CEO Terry Walby, who has built a very successful business building IP and services around Blue Prism technology. The companies and executives have worked together for several years now, and in some ways, the takeover is a natural evolution in their story.
Intense Competition Driving BPs’ Bold Move
Blue Prism is facing increasingly fierce competition in core RPA, not least because its two main rivals Automation Anywhere (AA) and UiPath are pouring vast sums into aggressive customer expansion programs, creating large partner ecosystems, free product versions, cloud delivery and free access to the product to build presence and scale.
This, arguably, caught Blue Prism off guard, and UiPath in particular has seen its valuation skyrocket to $7 billion today from $3 billion last September. Blue Prism, by contrast, is valued at $1.16 billion.
Given the rate at which rivals are growing, it was essential for Blue Prism to make a move that sends a clear message it is becoming more flexible and ready to fight its corner. Thoughtonomy fits well, and with a proven track record in cloud as-a-service RPA delivery, Blue Prism immediately leap-frogs its key competitors in this respect. Thoughtonomy also provides much needed AI and embedded intelligence skills, plus an entrée into the attended RPA space, where it had been obviously absent.
Can Thoughtonomy Help Blue Prism Retake the Lead?
The big question is whether the Thoughtonomy acquisition is enough for Blue Prism to compete on a more even footing with UiPath and AA.
At first glance, investors reacted negatively, knocking 14% off the share price. However, this could be as much to do with their lofty expectations for higher revenue growth than the 82% Blue Prism actually delivered in 1H19 (such are the expectations around RPA — but that’s still not at all bad in our book).
On balance, we are optimistic about the merger, because the capabilities of the combined businesses should generate significant new upside opportunities for both. There are of course risks in integrating its first acquisition and a mountain for Blue Prism to climb to reach UiPath’s valuation. But in terms of pure delivery capability for the customer, this deal certainly gives the company a big boost.
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