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JDA Acquiring i2...Again
Off-again/on-again deal back on as JDA looks set to beef up foothold in manufacturing space; acquisition puts JDA in position to compete with ERP heavyweights SAP and Oracle, AMR's Tohamy says
Scottsdale, AZ — November 5, 2009 — Supply chain solution provider JDA Software Group announced today that it has signed a definitive merger agreement to acquire i2 Technologies in a deal valued at nearly $400 million net, completing a journey that the two companies began last year when JDA initially set its sights on the rival software company.
The acquisition gives JDA a stronger foothold in the manufacturing (particularly discrete) supply chain space, where i2 was strong. JDA historically had been strong in the retail supply chain space but had targeted a strong position in manufacturing, including with its previous acquisition of i2 rival Manugistics.
In fact, at least one analyst suggested that the i2 acquisition puts JDA in a much stronger position to compete with ERP heavyweights SAP and Oracle, which have been busy building their own supply chain portfolios. The deal also puts i2 customers on more secure ground that the software company — and its solutions — will remain a viable alternative to SAP and Oracle.
History of the Deal
JDA had initially inked an agreement to acquire i2 in August 2008 for about $350 million net, but the two put the deal on ice in December after i2 said that it received a proposal from JDA to lower the price of the deal. JDA previously had acquired Manugistics in July 2006, enabling the company to beef up its offering for demand management, pricing optimization, and transportation and logistics management.
JDA's purchase price for i2 this time around is $434.4 million, or $18 per share. Net of i2's cash and the retirement of preferred stock, the price tag on the deal works out to about $396 million.
"Our strategic rationale for acquiring i2 is even more compelling today than it was a year ago," said JDA CEO Hamish Brewer in the companies' statement on the deal. "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."
i2 reported this week revenue for its third quarter was $54.6 million against $64.8 million in the third quarter of 2008, a decrease of $10.1 million or 16 percent. However, its net income of $10.8 million for the most recent quarter was a sharp increase over the $2.2 million net income reported for the same period last year.
Impact on i2 Customers
The combined company will have more than 6,100 customers, spanning manufacturing, wholesale and retail. While JDA had traditionally been focused on the retail sector, its recent acquisitions, including of Manugistics, had driven the manufacturing side of its business to around 40 percent of revenues. The i2 deal should push that figure to well over 50 percent, given i2's heavy focus on the discrete manufacturing space.
i2's chairman, president and CEO, Jackson L. Wilson, Jr., called the deal "a powerful combination" in the companies' 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."
The acquisition gives JDA a stronger foothold in the manufacturing (particularly discrete) supply chain space, where i2 was strong. JDA historically had been strong in the retail supply chain space but had targeted a strong position in manufacturing, including with its previous acquisition of i2 rival Manugistics.
In fact, at least one analyst suggested that the i2 acquisition puts JDA in a much stronger position to compete with ERP heavyweights SAP and Oracle, which have been busy building their own supply chain portfolios. The deal also puts i2 customers on more secure ground that the software company — and its solutions — will remain a viable alternative to SAP and Oracle.
History of the Deal
JDA had initially inked an agreement to acquire i2 in August 2008 for about $350 million net, but the two put the deal on ice in December after i2 said that it received a proposal from JDA to lower the price of the deal. JDA previously had acquired Manugistics in July 2006, enabling the company to beef up its offering for demand management, pricing optimization, and transportation and logistics management.
JDA's purchase price for i2 this time around is $434.4 million, or $18 per share. Net of i2's cash and the retirement of preferred stock, the price tag on the deal works out to about $396 million.
"Our strategic rationale for acquiring i2 is even more compelling today than it was a year ago," said JDA CEO Hamish Brewer in the companies' statement on the deal. "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."
i2 reported this week revenue for its third quarter was $54.6 million against $64.8 million in the third quarter of 2008, a decrease of $10.1 million or 16 percent. However, its net income of $10.8 million for the most recent quarter was a sharp increase over the $2.2 million net income reported for the same period last year.
Impact on i2 Customers
The combined company will have more than 6,100 customers, spanning manufacturing, wholesale and retail. While JDA had traditionally been focused on the retail sector, its recent acquisitions, including of Manugistics, had driven the manufacturing side of its business to around 40 percent of revenues. The i2 deal should push that figure to well over 50 percent, given i2's heavy focus on the discrete manufacturing space.
i2's chairman, president and CEO, Jackson L. Wilson, Jr., called the deal "a powerful combination" in the companies' 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."
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