JDA Software Group Inc., a provider of demand chain solutions, has acquired
Manugistics Group Inc., a provider of supply chain management solutions, for approximately $211 million. A decade ago, Manugistics was the top player in the then-emerging supply chain software market, but a steady shift in the marketplace coupled with cash flow problems saw the company's financial position progressively weaken. According to AMR Research, over the past 15 years Manugistics posted positive earnings in only one quarter, and was carrying $175 million of debt on its balance sheet.
By combining the two companies, JDA will be able to offer vertically focused solutions to the global demand chain: manufacturers, wholesalers, distributors and retailers. Based on each company's latest fiscal year results, the combined company would have had annual revenues in excess of $390 million and should benefit from significant recurring revenues with more than $170 million of annual maintenance revenue. The two companies have a combined base of more than 5,500 customers.
Hamish Brewer, CEO of JDA, will continue in that position as CEO of the combined company. "After extensive due diligence, we believe that merging with JDA is the best path forward for all of our stakeholders," comments Joe Cowan, CEO of Manugistics. Cowan is expected to pursue other opportunities once the acquisition closes. JDA plans to retain a number of Manugistics executives, as well as the Manugistics product brand name.
Thoma Cressey Equity Partners, an enterprise software investor with approximately $2 billion in equity under management, plans to invest $50 million in JDA in the form of convertible preferred stock. This investment will close concurrent with, and is contingent upon, the closing of the Manugistics transaction.
The synergies in operations, general, administrative and infrastructure resulting from the combination of JDA and Manugistics are expected to produce annual cost savings of $25 to $30 million dollars within the first 12 months after closing. The acquisition is expected to close in the second or third quarter of calendar year 2006.
