Stung by the worldwide recession and continuing consolidation in the enterprise software market, SoftBrands Inc., a $98 million provider of applications to small- and medium-sized manufacturers, has agreed to be acquired by Infor and Golden Gate Capital, its financing partner.
SoftBrands Friday said an affiliate of Infor and Golden Gate Capital will pay approximately $80 million for the company. SoftBrands expects the deal to close 60 to 90 days following release of a proxy statement and a vote on the proposed deal by SoftBrand’s shareholders. SoftBrand’s board of directors has already approved the deal.
“Size and scale matter in a consolidating software marketplace,” said SoftBrands President and CEO Randy Tofteland at a press conference called Friday to announce the deal. “For SoftBrands, it has been challenging to continue to operate in today’s consolidating ERP marketplace as a small company that has limited access to resources to fund growth.”
At the same time, he said, the recession has made it difficult for SoftBrands to remain profitable. For those reasons, Tofteland said, the acquisition is in the best interest of the company’s stakeholders.
The deal followed what Tofteland described as an extended process of several months by SoftBrands to find a buyer, a process that involved what he described as “an extensive market check. Infor put the best offer forward that was considered by our board,” Tofteland said.
The deal allows Infor to increase its manufacturing customer base while expanding the scope of its software products designed for hotels and other providers of hospitality services. SoftBrands has about 5,000 customers, and its revenues have been about evenly split between manufacturing and hospitality companies. The company has 740 employees.
The SoftBrands deal is the latest step in Infor’s strategy to grow to rival enterprise software giants SAP and Oracle by acquiring second- and third-tier vendors that struggle to compete with larger vendors on their own. Fueled with financing from private equity firm Golden Gate Capital, Infor has engineered some 40 acquisitions over the past five years. Acquisitions have included SSA Global, Mapics, and Datastream.
Infor officials were not available to discuss the company’s plans for integrating SoftBrands with the rest of Infor’s operations.
SoftBrands is best known for its Fourth Shift ERP platform for manufacturers. In 2005, the company entered into a partnership with enterprise software giant SAP under which it began marketing a version of SAP’s Business One product for small- and medium-sized manufacturers under the brand Fourth Shift Edition for SAP Business One. In 2007, in an attempt to differentiate itself in a consolidating market, SoftBrands decided to emphasize the Fourth Shift Edition for SAP Business One product, discontinuing the sale of Fourth Shift to new customers. At the same time, the company reduced its headcount and accelerated a shift to sales through value-added reseller partners rather than direct sales.
The company also announced it would become a reseller partner of SAP’s Business ByDesign software-as-a-service product for small- and medium-sized companies. SAP’s full rollout of Business ByDesign has been delayed.