IBM today disclosed plans to acquire MRO Software Inc., an enterprise asset management market leader and partner that has helped some of the largest manufacturing and utility companies manage industrial, fleet, and IT-based assets.
IBM will pay $740 million in cash for MRO, or $25.80 per share, a healthy premium on the company's opening share price today of $21.60. MRO's stock closed the day at $25.46, up almost 18% in intra-day trading on news of the proposed transaction.
The deal, pending regulatory and shareholder approval, is expected to close in the fourth quarter, with all key MRO management and staff retained and MRO's Bedford, MA, headquarters remaining open for the foreseeable future, operating as part of IBM's Tivoli systems management business unit, IBM said.
The move is part and parcel of IBM's push to grow its Global Services business by building repeatable services based on service-oriented architectures (SOA) that can be used by clients in industry segments spanning aerospace to telecommunications. The IBM acquisition offer is further validation of MRO's decision a few years ago to meld its asset and IT service management into a single enterprise suite called MAXIMO ES.
"Our clients are telling us they want a consistent and comprehensive way to manage all of their corporate assets and industrial assets," said Al Zollar, general manager of IBM's Tivoli division, in a teleconference with reporters this morning. "Clients across all industries have a common goal [which is to] reduce cost and simplify the infrastructure with a single console. The move we are making with MRO helps achieve that."
The news came on the heels of yesterday's announcement that IBM will purchase Webify Solutions, a systems integrator with SOA expertise in the insurance, healthcare, and banking industries. Both MRO and Webify have built applications around SOA, which will enable IBM to easily integrate technology and data from different business processes.
IBM and MRO Software have been business partners since 1996. MRO has held its own in an increasingly competitive EAM landscape that includes the likes of Oracle, SAP, and, most recently, Infor -- with its January acquisition of Datastream Systems Inc. That deal left MRO and Indus International as two among a handful EAM independents in a market that industry analyst firm IDC expects to exceed $1.5 billion in combined 2006 worldwide revenue.
MRO reported revenues of $199.2 million for fiscal year 2005 ended September 30, up 7% from the prior year. MRO's net income for the year was $13.6 million, compared to $10.3 million in the previous year. (Read about MRO's recently completed record-breaking fiscal third quarter.)
Indus, on the other hand, reported revenue of $133 million for its fiscal year 2006, ended March 31, 2006, down from $142 million in the previous year. But its year-end net income of $8.2 million was a refreshing change from the $6.1 million net loss reported in the previous year. In its most recent quarterly earnings, released on Tuesday, Indus reported a net loss of $1.7 million for its first quarter, ended June 30, on revenues of $27.8 million. In the corresponding quarter last year, the company earned $1.6 million on $33.6 million in revenue.
According to MRO insiders, it was only a matter of time before MRO Software was acquired -- given a turnaround which began with the delivery of its enterprise suite. MRO's other option was to acquire companies with synergistic technologies, which it did in 2002 when it bought IT asset management vendor MainControl Inc. Previously, MRO failed in a hostile takeover attempt of Datastream.