Manufacturing software fire-sale

Consolidation in the mid-market manufacturing and supply chain software sector reached new heights in November as low company valuations, underlying economic pressures, and growing competition from enterprise software giants such as SAP, Oracle and PeopleSoft began to take its toll.

One notably example was the acquisition of Industri-Matematik International (IMI), a 30-year-veteran of supply chain software. The Stockholm-headquarterd company was snapped up by technology investor Symphony Technology Group for an astonishing $11 million – a bargain described by AMR Research analyst Ann Grackin as picking up “Armani-like software at Macy’s prices.” IMI revenues in 2001 were $69.3 million, though the company had not made an annual profit since 1998.

The acquisition was somewhat of a venture capital buy-out for Wall Street-listed IMI. The company had been struggling to find investment for significant product enhancement, and was forced to cut 20% of its staff in October 2002. Grackin says that IMI’s future is likely be more secure and brighter under Symphony’s financial backing and industry knowledge.

Symphony Technology Group is the creation of Romesh Wadhwani, the founder of B2B commerce and supply chain software company Aspect Development, a company sold for a record $9.3 billion to supply chain software vendor i2 in 2000. Wadhwani remained on the i2 board until a few weeks before Symphony’s move on IMI.

The current low level of company valuations has also provided a fire sale deal for another veteran of manufacturing software, MAPICS. It bagged Frontstep, a software company with products based on Microsoft .Net technology, for only $29 million. Frontstep revenues in 2001 were $92 million.

The combined company will boast more than 10,000 customer sites and annual revenues of over $200 million. But MAPICS is not simply looking to fatten itself up to get through the economic winter. Frontstep brings with it access to Microsoft customers through SyteLine, a product recently rewritten for .Net.

This gives MAPICS, whose traditional focus has been on IBM’s AS/400 (now iSeries) platform, a ‘dual-platform’ strategy that, according to AMR’s Jim Shepherd, will make it one of the leaders in the mid-range ERP market. “The MAPICS brand is one of the strongest in the manufacturing software market… but the addition of a .Net product should help modernise its image,” says Shepherd.

Recent manufacturing/supply chain software acquisitions
Acquirer   Activity   HQ   Target   Activity   HQ   Price  
Dassault Systemes Product design s/w France Knowledge Technologies Int’l CAD knowledge mgmt s/w Taiwan n/a
Manhattan Associates Supply chain execution s/w US Transportation mgmt s/w US $20.0m
Mapics Manufacturing software US Frontstep Discrete manufacturing s/w US n/a
QAD Manufacturing s/w US TRW’s ISCS div Supply chain s/w US/Europe $1.0m
Symphony Technology Enterprise s/w investment US Industri-Matematik Int’l Supply chain man s/w Sweden $11.0m

Other major IT industry deals
Acquirer   Activity   HQ   Target   Activity   HQ   Price  
Accrue Software Customer analytics s/w US Personify (IP assets) Customer profiling s/w US $0.1m
Brocade Storage network switches US Rhapsody Networks Storage network switches US $175.0m
Documentum Content management s/w US TrueArc Records management s/w Canada $3.6m
Fiserv Data processing services US Sedona (customer base) Web-based CRM s/w US n/a
IBM Systems, s/w &services US Tarian E-records management s/w Canada n/a
Logica IT services UK CMG IT services UK/Holland E800.0m
Safenet Internet security technology US Cylink Security h/w and s/w US $35.4m
SAS Institute Business intelligence s/w US Verbind’s cust tracking s/w Cust behaviour analysis s/w US n/a
SBI and Co Professional services US Razorfish Internet development svcs US n/a
Simple Access Network security Canada Intel Network Sys (Shiva) div Remote access comms US n/a
Sonic Solutions DVD creation technology US Veritas’s desktop/mobile div Storage s/w US n/a
Sony/Philips Electronics Jap/NL InterTrust Technologies Digital rights mgmt s/w US $453.0m
Sun Microsystems Systems and software US Terraspring Utility computing mgmt s/w US n/a
Verity Search &content mgmt s/w US Inktomi’s intranet search s/w Enterprise info retrieval s/w US $25.0m

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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