JDA to Acquire i2"Again; Analysts Weigh In

Late last week, JDA Software Group Inc. announced that it signed a definitive merger agreement to acquire i2 Technologies Inc. for an enterprise value of approximately $396 million. The combination of the two companies is expected to create a global leader in the market for supply chain planning and optimization.

 

This isn't the first time that these companies have tried to join forces: i2 Technologies Inc. terminated its initial plan to merge with JDA Software Group Inc. in December 2008. Neither company cited a reason for the deal's termination, but economic uncertainty was suspected as a major factor.

 

"Our strategic rationale for acquiring i2 is even more compelling today than it was a year ago," says JDA Chief Executive Officer Hamish Brewer. "The challenges of the economic crisis have focused the market's attention on the disciplines of supply chain planning. Integrating i2's solutions and expertise will only expand our opportunity to build substantial new shareholder value over the coming years."

 

On a pro-forma trailing 12-month basis, the combined company has annual revenues of approximately $617 million. While the board of directors of each company has approved the transaction, consummation of the transaction, which is expected to close in first quarter 2010, is subject to several closing conditions.

 

"This is a powerful combination," says i2 Chairman, President and CEO Jackson L. Wilson, Jr. "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."

 

So how will the deal pan out this time? Industry analysts share their opinions here:

 

"There certainly are reasons to think this alliance will not end the same way as the last one -- not insignificantly because 'deal certainty' was one of the key tenets of this current announced merger agreement. It is also fair to surmise that financial market instability and investor cold feet contributed significantly to the deal failure last time and funding this time around has been structured quite differently -- to the point of having redundant funding options -- I am far more positive on this deal than I was back in 2008. Both JDA and i2 have shown resiliency in a tough marketplace over the past year, and the combined entity can, we believe, be a successful company in the marketplace, but please, close the deal this time!" -- Simon Ellis, Practice Director, Supply Chain Strategies, IDC Manufacturing Insights

 

"It is Groundhog Day! JDA and i2 Technologies re-announce their intention to move forward on an acquisition. The stop and starts have caused a delay in both companies ability to move forward on tackling industry-specific solutions." -- Lora Cecere, Vice President, Head of Research, AMR Research

 

"The acquisition of i2 by JDA was a good idea last year, and it still is this year. The economic crisis immediately following the announced deal last year negated the terms of the deal. Capgemini believes the acquisition of i2 will allow JDA to expand its offering within new markets such as aerospace & defense and hi-tech. JDA is acquiring a strong installed base with a healthy maintenance stream. The result: A strong demand/supply chain solution provider just got stronger." -- Brian Girouard, leader, Global Consumer Products, Retail & Distribution Sector, Capgemini

 

Click here to read industry reactions to the initially planned merger between JDA and i2, which was terminated last December.