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JDA Software group has announced it has signed a merger agreement to purchase supply chain software specialist i2 Technologies for $396 million.
Now, if this all sounds a bit familiar, that’s because it is. It was 15 months ago, in August of 2008, when JDA announced it was buying i2 for $346 million. The deal was then called off in December of 2008 when JDA was faced with the double whammy of a rapidly deteriorating economic climate and tight credit markets. It attempted to negotiate a better deal with i2, but the companies could not come to an agreement.
The decision by JDA to take another run at i2 not only provides a timely lifeline for Dallas-based i2, it’s another signal that the economy is turning around. “Our strategic rationale for acquiring i2 is even more compelling today than it was a year ago,” JDA Chief Executive Officer Hamish Brewer said 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.”
JDA and i2 both have problems. For its part, JDA has a fairly loyal customer base of companies in the mid-tier market which use its software for such operations as merchandising, revenue management and supply chain planning. It is particularly strong in retail, with more than 5,800 customers. The problem it faces is that larger rivals such as Oracle and SAP have continued to build out their offerings into vertical segments and are increasingly courting the mid-sized companies. i2 also claims a very loyal customer base, but like JDA it faces increasing pressure from the big ERP players.
Together, the companies hope to be able to better fend off competition and offer customers a more sophisticated supply chain offering. “This is a powerful combination,” i2 Chairman and CEO Jackson Wilson said in a statement. “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.”
i2 originally put itself on the block in November of 2007 when the company formed a strategic review committee to look at options to enhance shareholder value. At one point it said it was in discussions with at least two parties regarding a sale or merger. The main drawing card for i2 is its high profile customer base which includes such companies as Toyota, General Motors, Nokia, and Anheuser-Busch.
Together the companies will have 2,970 employees and more than 6,000 customers. Combined revenues are about $617 million.
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