April 4, 2011 – A private equity firm has entered into definitive agreements to acquire two enterprise resource planning providers, Activant Solutions Inc. and Epicor Software Corporation.

Apax Partners would pay a combined $2 billion for the ERP companies, with plans to merge them under the name Epicor Software Corporation, according to a news release. The new company would create one of the largest global providers of ERP applications, primarily focused on manufacturing, distribution, services and retail industries.

Andrew Dailey, managing director at consultancy MGI Research, says the deal comes with a low price tag, likely due to slow growth by Epicor and Activant, and ongoing consolidation in the ERP marketplace with other proposals like the one being mulled by Lawson. Dailey says customers and innovation might not benefit from the merger of the companies, though Apax will at least be able to milk returns from back office combinations.

“In the boardroom, it looks like there are some great synergies. In reality, you’ve got a grab bag of products, markets and vertical industries, and very little leverage in your R&D and your sales and marketing,” Dailey says.

Apax pegged the number of customers for the new Epicor at 30,000 and $825 million in revenue. Pervez Qureshi, Activant president and CEO, said in a news release that the merger of his company with Epicor enables better competition globally.

“Together, Activant and Epicor's retail business solutions can now cover the full spectrum of retailing – from small hardlines retailers, to national specialty softgoods and apparel chains, to global general merchandise department stores,” Qureshi said.  

Apax invests in companies across industry verticals such as technology, retail, media, health care and business services. It will pay $976 million for Epicor, and though final numbers on privately held Activant were not announced, the equity firm notched the overall price tag at about $2 billion. The Activant deal is reliant on the acquisition of Epicor, and both are expected to close this quarter, Apax stated.


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