Supply chain merger: JDA Software to acquire i2 Technologies
Nearly a year after the global credit crunch caused the two companies to walk away from a merger, JDA Software has once again announced plans to acquire supply chain software specialist i2 Technologies.
JDA Software Group, Inc. (NASDAQ: JDAS) and i2 Technologies, Inc. (NASDAQ: ITWO) announced the signing of a definitive merger agreement on Thursday, Nov. 5.
JDA has agreed to pay approximately $396 million for i2, a former supply chain market leader, which at one time boasted market capitalization of more than $1 billion.
On a pro-forma trailing 12-month basis, the combined company has annual revenues of approximately $617 million, including over $275 million of annual maintenance and recurring subscription fees.
The combined company also will have more than 6,100 customers across the world, making it arguably the world’s largest standalone supplier of supply chain applications. The merger also gives JDA inroads into the discrete manufacturing sector. Traditionally, JDA has specialized in providing distribution planning and execution solutions for the retail sector.
Last fall, JDA made the same offer to acquire i2. A few weeks later, JDA asked to negotiate a lower price, stating that because of the global financial crisis, "available credit terms would result in unacceptable risks and costs to the combined company."
That didn’t fly with i2 management, which argued that the deal was not tied to JDA’s ability to obtain favorable financing. On December 4, 2008, i2 announced its intent to terminate the deal and said it expected JDA to pay a $20 million termination fee within three business days.
It’s not clear whether i2 ever received the $200 million, but it did sign the purchase agreement for $396 million this time around.
According to JDA CEO Hamish Brewer, the i2 acquisition will firmly establish JDA as a leading enterprise software company with a deep focus on supply chain management and a full complement of managed and hosted services offerings.
"Our strategic rationale for acquiring i2 is even more compelling today than it was a year ago," he said. "The challenges of the economic crisis have focused the market’s attention on the disciplines of supply chain planning and JDA has established a leading role in this active market. Integrating i2’s solutions and expertise will only expand our opportunity to build substantial new shareholder value over the coming years.
"Over time we have come to know the i2 business very well and based on our detailed diligence and proven track record for delivering value, I am confident that we can reliably unlock the sizable potential that exists within this company," added Brewer.
"This is a powerful combination," said i2 chairman, president and CEO Jackson L. Wilson, Jr. "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."
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-Sidney Hill, executive editor, Manufacturing Business Technology www.mbtmag.com