Infor, which completed its $1.6 billion acquisition of SSA Global just last Friday, said today that it is acquiring yet another software company -- Extensity, a developer of financial and other software products for mid-market companies.
Extensity had been part of Geac Computer Corp., which was sold last November for $1 billion to private equity firm Golden Gate Capital, Infor's major backer. At that time, Infor only bought a select number of Geac's software products which did not include Extensity's offerings.
Today, Infor said that, through a financial transaction that involved a recapitalization of Infor to complete its acquisition of SSA and a transfer of Extensity-related equity and debt, it had acquired Extensity and a U.K.-based financial and performance management software provider called Systems Union Group, which itself was acquired by Extensity in April.
The transaction adds a significant number of customers and revenue to Infor, which, with the acquisition of SSA, has acquired 19 software companies since its founding in 2002. Now, with Extensity, Infor weighs in at $2.1 billion in revenue and 70,000 customers, the third-largest enterprise applications software provider after Oracle and market-leader SAP. Prior to Extensity's addition, but with SSA, Infor had said that revenues stood at $1.5 billion and its customer base at 37,000.
"With this acquisition, we are now the fastest-growing enterprise software company in the world, with 90% of our 70,000 customers in the mid-market," said Infor chairman and chief executive Jim Schaper during a conference call today. "We have more customers in the mid-market than Oracle and SAP combined."
In a question and answer session on the call, Schaper elaborated on the rationale for the Extensity acquisition, Infor's debt obligations, its competitive position in relation to Oracle and SAP, and its acquisition plans going forward.
With regard to the timing of the Extensity acquisition, Schaper said that Infor did not acquire Extensity at the time of the Geac transaction because there was no target market alignment. Compared to Infor's target market of companies from $20 million to $1 billion, Extensity was more upstream and similar to that of SSA. But neither SSA nor Systems Union, which more closely matched Infor's targets, were for sale at the time.
"The facts were now changed and both became available," Schaper said, which led to the acquisition of the combined Extensity and Systems Union.
Many of Infor's acquisitions have been financed through debt, including the SSA acquisition. Asked by
Managing Automation about Infor's overall debt load, Schaper said that the company's debt is organized in what he called a "first lane structure" and in a bridge facility. The bridge facility is a series of notes that will be replaced by a bond offering in the next 12 months, he said, adding that Infor's overall debt load is "very manageable."
Asked about competition with Oracle and SAP, Schaper said that Infor's target market for both integrated suites and best-of-breed products ranges from the low end of the mid-market, which he defined as $50 million in revenue or more, up to larger companies with between $750 million and $2 billion in revenue. He noted that many companies with mixed computing environments could want to take advantage of components of the Infor product lines but may not be in Infor's target market, strictly speaking.
He said Infor competes "every day" in situations like this with Oracle and SAP and he expected that to continue. But he stopped short, as he has on other occasions, of directly challenging either Oracle or SAP in what is known as the tier-one portion of the market. "You will not see Infor attempt to acquire or build a high-end" software product line there, he said.
Schaper also said that he expects to
continue to acquire companies to support Infor's dual strategy of integrated suites and best-of-breed applications. "We're at the end of the beginning, not the beginning of the end" of the acquisition strategy, he said.
Extensity, formed in March of this year, offers such applications as financial planning, budgeting, and forecasting; compliance management; and fixed-asset management, procurement, and inventory management, among others. MPC, Enterprise Server E-Series, and M-Series and SmartStream are some of its brand names. Extensity sells to the apparel, footwear, food and beverage, construction, and other markets.
Systems Union, formed in 1981, offers business intelligence and financial management applications under such names as MIS, Pegasus, and SunSystems. The company serves the retail, consumer goods technology, and media markets.