The rival supply chain software providers RedPrairie and JDA Software said Thursday they will merge
in a $1.9 billion deal that will create a combined entity with annual revenue of more than $1 billion.
Rumors that JDA was shopping itself surfaced earlier this week, with privately-held RedPrairie eventually emerging as the buyer.
“RedPrairie will effect a cash tender offer to acquire all outstanding shares of JDA common stock for $45 per share,” the companies said in a statement. “The $45 per share offer price represents a 33 percent premium to JDA’s stock price on Oct. 26, 2012 – the day before market rumors surfaced stating JDA was exploring a sale. The offer price also represents a 16 percent premium to JDA’s all-time high stock price.”
The combined entity will be led by current JDA Chief Executive Officer Hamish Brewer. RedPrairie’s CEO, Michael Mayoras, will remain on the board of the combined company.
“This transaction generates tremendous value for JDA shareholders, offering them a meaningful premium for their shares,” Brewer said. “This is a strong combination of two leading companies with highly complementary product suites. It will give businesses the power to better manage global commerce through a new world of capabilities. The combined company will have a unique ability to address our customers’ increasingly complex needs with a full spectrum of solutions for planning and execution across the entire value chain.”
The companies said their core strengths are complementary, with JDA a leading vendor in the supply chain planning, merchandising, and pricing arenas, and RedPrairie strong in warehousing, workforce management, store operations, and e-commerce. The merger could potentially present some overlap in terms of domestic transportation management systems (TMS) and retailer merchandising systems.
Earlier this year, the analyst Gartner included JDA in the list of the top five supply chain management vendors by revenue
, alongside SAP, Oracle, Ariba, and Manhattan Associates.
The companies stressed their combined strengths will meet the supply chain needs of “hyper-connected, mobile consumers” in the retail and manufacturing sectors.
“This merger establishes a company perfectly suited to meet the evolving demands of the ‘always-on’ mobile consumer,” Mayoras said. “Both companies have historically demonstrated their leadership in supply chain innovation. I look forward to committing myself to the success of this combined company because I believe it will provide extraordinary customer value.”
RedPrairie Chairman Alok Singh stressed JDA’s proficiency in cloud-based applications.
“We believe that this combined company will deliver a strong ROI and extraordinary customer value for both B2B and B2C enterprises,” he said. “Both companies share a history of innovation, including JDA’s leadership in cloud offerings and RedPrairie’s strength in workforce management and e-commerce.”
wrote about JDA’s expanded cloud strategy
in May and its convergence strategy
in January 2011.
JDA’s recent history is dotted with key transactions, including the 2006 acquistion of Manugistics and then its 2010 purchase of i2
, both of which widely expanded JDA’s TMS footprint.
The deal is expected to close by the end of 2012.
Meanwhile, JDA on Thursday also reported slightly lower revenue
and EBITDA levels in the third quarter of 2012 than in the corresponding quarter in 2011.
Revenue fell from $173.1 million to $164.5 million, while adjusted EBITDA was $44.5 million in third quarter 2012, compared to $52.9 million last year. Revenue and EBITDA year-to-date are also down marginally from 2011, though the company has retained a roughly 26 percent EBITDA margin. - Eric Johnson