Infor Global Solutions, a manufacturing and distribution enterprise software provider, has signed an agreement to acquire MAPICS Inc., a provider of enterprise software for the manufacturing industry, in a stock deal valued at about $350 million.
The transaction, which values MAPICS' 27.2 million shares at $12.75 a piece, is expected to close on April 15th. Integrating MAPICS' operations into Infor should be completed within 90 days after the acquisition closes, Tom Lynch, Infor's senior vice president and CTO told Managing Automation. Creating a strategic roadmap for the two companies will take considerably longer, he pointed out.
In a research note published yesterday, Bruce Richardson, a senior vice president with AMR Research (Boston) said, "The MAPICS deal adds clout to (Infor's) presence in automotive and discrete manufacturing, and fills a void in the make-to-stock segment." The proposed combination also provides Infor with a global reseller network and expands the company's geographic coverage from 45 countries to 70, including China, Japan, Indonesia and Malaysia, he noted.
Prior to this proposed acquisition, Asia accounted for only 4% of Infor's revenue, Richardson said.
The MAPICS acquisition is Infor's 14th over the past two-and-one-half-years. The deal is consistent with the vendor's global strategy of assembling software products that fit into targeted manufacturing and distribution vertical markets. "Infor is an assembler. We acquire only high quality brands that fit the verticals we're in," Lynch said. "We're not just buying anything, and that's an important message."
MAPICS' discrete manufacturing strength, along with its process and distribution industry stature, made the company an appealing acquisition target for Infor, according to Lynch. Prospects in the discrete manufacturing market are pretty strong; industry analysts are predicting growth rates of about 8%, said Lynch.
In spite of this rosy forecast, MAPICS' executives believed that to remain viable amid ongoing industry consolidation, the company had to be much bigger. "It's clear that, in order to be competitive, you have to be a big player -- over $500 million -- and we're a $175 million company," said Dick Cook, president and CEO of MAPICS, in an interview.
Realizing that it would take several acquisitions over a number of years for MAPICS to achieve its desired size, the company decided that being acquired by Infor was a better choice, Cook explained.
Cook said MAPICS entertained other acquisition offers, but he declined to discuss specifics about other potential bids.
Minimal customer overlap between the two companies should bolster MAPICS' shareholder support of the proposed acquisition, said Cook. In fact, the two companies have more complementary products than overlapping ones, he noted.
For example, many MAPICS customers use MAPICS ERP for IBM's iSeries platform -- previously called the AS400. The company found that as these customers' businesses morphed from manufacturing to distribution they needed more functionality, Cook said. Infor can better address these needs by integrating MAPICS software with iSeries-based distribution applications that were acquired from daly.commerce, he explained.
Infor and MAPICS executives are building a 36-month product roadmap, which will detail the combined companies' product portfolio and move forward plans, Cook said. MPower, MAPICS' annual international customer conference in May, will be the ideal time for Infor to announce its long-term plans for MAPICS' applications, said Cook. The strategy for now is to stay the course, he noted.
No decisions have yet been made concerning the fate of MAPICS' employees, but Lynch emphasized that Infor acquires companies, not only for their products, but for their technical expertise. Having been in the market for over 25 years, MAPICS' "valuable deep domain experience is an asset along with the products," he said.
Given few product redundancies, Cook suggested employee reductions would be minimal once the transaction is completed. As for his future with Infor, Cook said no decision has been made.
If the acquisition is completed, Infor's customer base would grow by 4,500 to 17,500 worldwide. Together, the company's revenue would reach $575 million.
Infor's Lynch said the company is not through making acquisitions. "It's a safe bet to say that this is not our last deal," he declared.