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.
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.
JDA CEO Hamish Brewer will serve 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 Manugistics CEO Joe Cowan. 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 experienced enterprise software investor with approximately $2 billion in equity under management, plans to invest $50 million in JDA Software in the form of convertible preferred stock. This investment will close concurrent with, and is contingent upon, the closing of the Manugistics transaction. Orlando Bravo, managing partner at Thoma Cressey, will join JDA’s board of directors.
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. “JDA will finance this acquisition by taking on a moderate amount of debt, which is the best approach to avoid equity dilution and maximize shareholder value,” comments Kris Magnuson, JDA’s executive vice president and chief financial officer who will retain her position post acquisition. “Two lenders, Citigroup and UBS Investment Bank, are financing a portion of the purchase price.”
The acquisition is expected to close in the second or third quarter of calendar year 2006.
