JDA set to acquire i2 Technologies
Deal would increase company's manufacturing presence, but analysts say it may face integration obstacles.
By Jeff Berman, Group News Editor -- Modern Materials Handling, 9/1/2008
IN ANOTHER EXAMPLE of consolidation that has impacted the supply chain software sector in recent years, JDA Software Group, a provider of demand chain technology services, announced plans to acquire i2 Technologies, a supply chain management software and services company, for approximately $346 million.
This deal marks JDA's 11th acquisition in the last 10 years, and it is expected to close during the fourth quarter of this year after the necessary approvals, according to a company statement. The acquisition of i2 is the largest for JDA since its May 2006 purchase of Manugistics for $211 million.
In Modern's July 2008 Top 20 ranking of supply chain management software suppliers, JDA ranked No. 3, with a 2006 revenue of $374 million. i2 came in No. 5 on the ranking with $260 million in revenue. A merger of this size would surely impact next year's list.
While best known for its retail software, JDA has been battling rival Manhattan Associates to be the largest supply chain software vendor in revenue and market capitalization. If the i2 acquisition is approved, JDA will become the clear market leader, with a combined $634.8 million in revenue and more than 6,000 customers, according to Bruce Richardson, an analyst at AMR Research.
JDA also noted in its statement that this “combined company creates one of the world's strongest best-of-breed software solutions providers focused on the global supply chain for the manufacturing, wholesale distribution, retail and service industries,” with a combined $635 million in annual revenues. The companies added that by combining JDA and i2, the resulting entity will have significantly improved operating leverage and a strong financial position.
JDA CEO Hamish Brewer said that this acquisition marks the “next logical step for JDA in its ongoing transformation and growth of the company.” He said it helps JDA become more firmly entrenched in the process manufacturing space, which it initially entered with the Manugistics acquisition as an extension of its strategy to become supply chain specialists.
While JDA's CEO Hamish Brewer is bullish about what i2 can bring to the table for JDA, some industry analysts told Modern that there are factors regarding the deal that will make it unclear, at least in the short-term, how successful it will eventually be.
Bob Parker, vice president of Manufacturing Insights, said in an interview that the deal gives JDA added scale when going up against the duopoly of ERP titans SAP and Oracle. He cautioned that Manufacturing Insights is not particularly optimistic that JDA, based on its experience with Manugistics, is going to invest significantly enough to satisfy the i2 install base.
Other mergers and acquisitions
This deal was not the only merger/acquisition news this month. Transbotics Corporation announced in August it signed a letter of intent to sell most of its assets to Nova-Tech Engineering, LLC, an aerospace engineering company, for an undisclosed amount. That deal will be settled October 15.
A week earlier, IBM and ILOG announced that both companies signed an agreement for IBM to buy the business software manufacturer, paving the way for a multimillion-dollar deal. According to an ILOG press release on the acquisition, the company expects to combine its software with IBM's business process management, business optimization and service-oriented architecture technology.
JDA set to acquire i2 Technologies
08/11/2008JDA/i2 deal is called off
12/07/2008JDA/i2 deal is called off
12/31/2008
View All On-Demand Webcasts
