November 5, 2009 - JDA Software Group, Inc. and i2 Technologies, Inc. today announced the signing of a definitive merger agreement for JDA Software to acquire i2 Technologies, Inc., a global provider of supply chain solutions, for an enterprise value of approximately $396 million. Sources, including the Wall Street Journal, have reported a purchase amount of $434.4 million, but that number doesn’t reflect i2’s estimated cash balance at closing.
This merger acquisition isn’t a surprise. The Wall Street Journal also noted that a deal between the two software companies fell apart last December whenas JDA needed more time secure funding to close the deal. The transaction signed today is structured to include a high degree of completion certainty, and even includes an alternative structure including a right for i2 common stockholders to receive a cash payout and .580x shares of JDA common stock.
When complete, the combination of the two companies will create a huge global provider of supply chain planning and optimization solutions and will expand JDA’s market to include discrete manufacturing and additional reach in transportation. The combined company will have more than 6,000 customers, and on a pro-forma trailing 12-month basis has annual revenues of approximately $617 million, including over $275 million of annual maintenance and recurring subscription fees.
JDA Chief Executive Officer Hamish Brewer believes the i2 acquisition will 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,” said Brewer in a statement. “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 was born in the 1980s as an early innovator is supply-chain management automation software, but reached its zenith in the dot com bubble when its market capitalization topped $70 billion. It boasted clients such as Hershey’s and Nike, but Nike’s then-CEO Phil Knight loudly complained later of being oversold on the product. As a best-of-breed vendor, i2 also had to compete in the supply-chain space with SAP, and JDA for that matter, who were providing broader solutions. In 2006, JDA acquired another dot com supply chain high flyer, Manugistics, for $211 million.
i2 Chairman, President and CEO Jackson L. Wilson, Jr. stated that i2’s customers will be supported by a team of supply chain professionals that is “unmatched in the industry” and that with the combination, innovation will accelerate. “This is the right transaction for our customers, partners and employees,” said Wilson.
The transaction is scheduled to close in the first quarter of 2010.
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