On September 5, 2006, Illinois Tool Works Inc. (NYSE:ITW) announced will acquire Click Commerce, Inc. (NASDAQ:CKCM), a leading provider of on-demand supply chain management solutions for a variety of worldwide industries.

The total value of the deal, including payment for outstanding stock options, will be approximately $292 million, a 33% premium over the closing price of Click Commerce’s shares at the time, and approximately 4x Click Commerce’s trailing 12 months revenue. This is a healthy premium compared to other recent software transactions.

This is the latest in a series of Software-as-a-Service (SaaS) providers to be acquired by established companies. In August, Employease was acquired by ADP, marking the beginning of the convergence of business services and SaaS. The ITW acquisition of Click Commerce represents the start of a new trend among specific sector leaders seeking to expand their portfolios via SaaS solutions.

While not a household name, ITW is a $12.8 billion, diversified manufacturer of highly engineered components and industrial systems and consumables. ITW has approximately 50,000 employees spread across 700 business units in 48 countries.

The fact that a company of this size is not only aware of Click Commerce’s on-demand solutions, but is attracted enough to them to acquire it, is a clear indication that SaaS is squarely on the radar screen of major corporations, as well as small- and mid-size businesses (SMBs).

Cynics could suggest that the escalating number of SaaS acquisitions by established companies is the same herding exercise we saw during the dot.com era. It is too early to tell if this latest round of transactions will be more successful. But, the tangible benefits which businesses are experiencing from SaaS are already far greater than the hypothetical ones promised by the over-hyped start-ups of the original Internet boom/bust.

If today’s acquirers can succeed in not killing the golden-goose in each of the new deals, they can further validate the practical, business benefits of SaaS, and accelerate its penetration into mainstream industry.

The total value of the transaction, including payment for outstanding stock options, will be approximately $292 million, a 33% premium over the closing price of Click Commerce’s shares at the time, and approximately 4x Click Commerce’s trailing 12 months revenue. This is a healthy premium compared to other recent software transactions.