The combination will create a supply chain management software company with revenue of more than $600 million that can better compete with SAP and Oracle.
August 11, 2008
http://www.informationweek.com/news/software/systems_management/showArticle.jhtml?articleID=210001970&subSection=ERP
In a challenge to industry giants Oracle and SAP (NYSE: SAP), business applications vendor JDA Software said Monday that it has agreed to acquire rival i2 Technologies for $346 million in a move that would double its size.
Both JDA and i2 specialize in supply chain management software, which helps companies automate inventory recording and funnel real-time warehouse information to front-office departments like sales and billing.
Under the agreement, JDA will pay $14.68 per share to acquire all of i2's outstanding stock. The offer represents a 4.9% premium on Friday's closing price for i2 shares. The deal is debt financed, with JDA tapping funds from investment banks Credit Suisse and Wachovia.
The deal would create a single company with revenue of more than $600 million. JDA executives said the move would better their company's ability to compete with heavyweights like SAP and Oracle (NSDQ: ORCL) -- particularly in the manufacturing market.
"By acquiring i2, we double our addressable market in manufacturing," said JDA chief executive officer Hamish Brewer, in a statement. I2's manufacturing customers include LG Electronics, Caterpillar, and
JDA also said that the combined companies could achieve a total cost savings of about $20 million by paring overlapping areas. JDA has about 1,700 employees, while i2's head count totals about 1,300. It's likely that those numbers would be reduced somewhat as a result of the tie up.
The merger is the latest sign that consolidation in the business software market is heating up. Earlier this year, IBM (NYSE: IBM) bought out Canadian business intelligence application vendor Cognos for $4.9 billion. In 2007, Oracle announced a deal to buy business performance management specialist Hyperion for $3.3 billion. Also last year, SAP announced an agreement to acquire Business Objects for $6.8 billion, or $59.35 per share.
JDA said it expects to complete its buyout of i2 in the fourth quarter, subject to closing conditions. Shares of i2 were up 1.13% in early trading Monday, to $14.32. JDA shares were up slightly more than half-a-percent to $18.02
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