Logistics technology: JDA-i2 deal is back on
Once again, demand chain technology services provider JDA Software Inc. has announced it will be buying supply chain management software and services company i2 Technologies, and this time the two companies say they are committed to making it happen in the first quarter 2010.
Jeff Berman, Group News Editor -- Supply Chain Management Review, 11/5/2009
Nearly a year after a deal in which JDA Software Inc., a provider of demand chain technology services, was going to acquire i2 Technologies, a supply chain management software and services company, was called off, it now appears the deal is back on.
The companies announced today they have inked a definitive merger agreement for JDA to acquire i2 for roughly $396 million. Company officials said that the combination of JDA and i2 "creates a global leader in the market for supply chain planning and optimization." And they added that on a pro-forma trailing 12-month basis, the combined organization has annual revenues of roughly $617 million, including $275 million of annual maintenance and recurring subscription fees. The transaction is expected to close during the first quarter of 2010.
JDA and i2 said today that the combined company will benefit from significantly improved operating leverage and a strong financial position, with estimated net annual cost savings of roughly $20 million.
"This transaction places JDA extremely well as a leading player in the supply chain technology space," said JDA CEO Hamish Brewer on a conference call this morning. "The strategic rationale for this decision remained unchanged from a year ago, which is, we believe, the opportunity to create a leading software company in the supply chain space and to create a leader in the transportation marketplace."
Brewer added that by building a larger company with greater scale will allow JDA to accelerate innovation and carve out a strong market leadership position. One major takeaway of this deal cited by Hamish is the ability of JDA to sell into the discrete manufacturing space and also to spur the development of i2's retail-specific offerings into the retail marketplace, where JDA is well-established.
As a major player in the supply chain software market, Brewer explained that JDA has a real opportunity to be a source of innovation and service in the market place, adding that current economic conditions have created a strong focus on efficiency and supply chain operations globally.
With JDA's retail presence, i2's discrete manufacturing presence, and Manugistics' (JDA acquired Manugistics in July 2006 for $211 million) process manufacturing presence, Brewer said JDA has significant integration opportunities across these three verticals for end-to-end supply chain processes and innovation from raw materials to manufacturing to distribution to retail to the consumer.
"That is our intention and our primary goal," said Brewer. "There are synergies on one hand and opportunities for innovation on the other hand. The innovation opportunities are going to be the long-term growth drivers here."
This transaction will result in a company with more than 1,000 global employees who have "deep domain expertise" in supply chain and related disciplines, according to Brewer, and that will allow JDA to implement, support and operate systems for customers, whether they be on-demand or through managed services.
This marks the 11th acquisition for JDA since 1998. JDA officials said in August 2008 that this "combined company creates one of the world's strongest best-of-breed software solutions provider focused on the global supply chain for the manufacturing, wholesale distribution, retail and service industries."
The back story: In December 2008, JDA and i2 tabled a previously announced August 2008 deal for roughly $346 million. At that time, i2 officially terminated its Agreement Plan of Merger with JDA, following a November 6, 2008 approval by i2 stockholders to approve the proposed merger, with the number of shares voted in favor of the merger representing more than 80 percent of the total shares outstanding and more than 99 percent of those voting shares in favor of the merger.
But i2 said it received a written proposal on November 6, 2008 from JDA to amend-or lessen-the common share consideration in the merger agreement below the $14.86 per share price (at that time). At that point, i2's board of directors decided this proposal was "not in the best interests of i2's stockholders to pursue it." And this left i2 to conclude that there was no real assurance the deal would be closed as stipulated in the merger agreement-leading to the deal being called off.
"This is a powerful combination," said i2 Chairman, President and CEO Jackson L. Wilson, Jr., in a statement. "Our customers will be supported by a team of supply chain professionals that is unmatched in the industry. Innovation will accelerate. Our expanded geographic footprint will enhance sales penetration and service delivery. This is the right transaction for our customers, partners and employees."
JDA Software To Acquire i2
03/15/2010Logistics technology: JDA-i2 deal is back on
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