Oracle Corp. will get a 2 percent equity stake in Covisint LLC, matching the interest the exchange gave rival software maker Commerce One Inc. - but Commerce One has emerged as Covisint's favored technology provider.
That's because Commerce One's agreement with Covisint also calls for an undisclosed share of revenues generated by Covisint during the next 10 years. And Commerce One will collect licensing fees from Covisint for its software and cash compensation for its consulting services.
Financial details were unavailable, but Covisint expects to handle transactions worth at least $240 billion per year.
'The revenue sharing applies to all gross revenues generated from Covisint, regardless of the category,' said Robert Tarkoff, senior vice president of worldwide business development at Commerce One. He would not divulge the percentage of revenues.
Covisint, the online trade exchange conceived and developed by DaimlerChrysler, Ford Motor Co. and General Motors, began operations in October and now has more than 250 clients.
As part of the deal, Ford and GM each get 14.4 million Commerce One shares; each automaker's shares are valued at about $630 million, for a total combined stake of 14 percent. These are not newly issued shares, but reallocated shares that GM had held as part of an earlier agreement, Tarkoff said.
Neither Covisint nor Commerce One would comment on Covisint's current valuation.
Covisint will provide such a number as it gets closer to its initial public offering on Wall Street, said Rico Digirolamo, a GM employee Covisint is now referring to as its interim CEO.
Commerce One is a technology partner in a unique position with Covisint, said Charles Donchess, chief strategy officer at Commerce One.
'Covisint is projected to do hundreds of millions of dollars worth of revenue over the next two to three years, and even into the billions for the life of the 10-year agreement,' Donchess said. 'Commerce One is the only technology partner with a revenue share of that. That is significant to us, and that is going to be made up from a variety of different charges, including transaction fees, subscriptions, access fees and the like.'
Donchess said more than $1.5 billion worth of transactions have gone through Covisint.