Continuing its aggressive acquisition path, enterprise applications purveyor Infor Global Solutions agreed today to purchase asset management software player Datastream Systems Inc., in a deal valued at about $216 million.
The deal, which is expected to close in the second quarter following regulatory approval, calls for Infor to pay $10.26 per share in cash to Datastream stockholders.
Although this is the eighteenth acquisition for Infor in three years, and the seventh within a 15-month period, the deal is unique in that it adds enterprise asset management into the software vendor's product mix -- an important element in any ERP package.
And Infor has plenty of ERP solutions, having acquired Lilly Software in October 2004, MAPICS in January 2005, and GEAC Computer Corp. this past November. It also purchased supply chain planning company Mercia Software in January, distribution software vendor Intuita Holdings Ltd. in July, and PLM provider Formation Systems in August. (Click here for more details on Infor's acquisitions.)
For Datastream, this is not the first time it has been courted. In early 2002 the company ducked and dodged a $6 per share acquisition offer by MRO Software Inc. In an interview with Managing Automation in January 2002, Datastream officials said it "was not a serious offer" despite the fact the company at the time was trading in the $4 range. The relationship turned hostile, and ultimately died.
Datastream continued to chug along, trading at $8.79 at market close yesterday -- making the $10.26 per share a "serious offer." Datastream's shares closed today at $9.87 a share, a smidge below its 52-week high of $9.90 a share.
"The MRO [acquisition attempt] was more of a bear hug to mess up our quarter," said Greg Sutter, Datastream's vice president of marketing, in an interview today.
Analysts agree that the MRO offer was more of a consolidation play. "Datastream would have been absorbed and it would have lost [its] identity," said ARC analyst Houghton LeRoy, who characterized the deal as more of a value proposition for shareholders than "a takeover for the customer base."
Indeed, Datastream can now expand its customer base. "This transaction we welcome with open arms," Sutter said. "It's a fantastic combination."
Fantastic because Datastream will gain access to Infor's 18,000 customers for business expansion. Moreover, the two companies have about 1,000 common clients. Datastream has 6,700 customers.
While Infor's acquisition list is long, it is not haphazard. "Any one of the acquisitions we've done historically, as well as this one, is a way of driving a much bigger profit potential for every one of our manufacturing [customers]," said Infor's chief marketing officer Tom Lynch in an interview with Managing Automation.
The Datastream deal also adds an important element to the company's ERP strategy. "We've had linkages to asset management systems for our customer base, but the real compelling reason this [deal] came about was that our manufacturing and distribution asset intensive [customers] have been demanding this from Infor," Lynch said.
Datastream has two core products, MP2 and Datastream 7i. MP2 is more of a single-site enterprise product, whereas 7i has been built on a Web services model and SOA, which harmonizes with the direction Infor is taking with all of its applications.
While Lynch declined to offer details on a roadmap strategy to product integration, he did say that tight integration across the broad suite of products is planned and will be rolled out over the next 18 to 24 months.
As for Datastream, because there is no overlap in business, the current executive team and workforce will remain intact to preserve domain expertise. Over time, however, the corporate brand will migrate from Datastream to Infor, he said.
Although it was de-listed from the NASDAQ earlier in year, Datastream has been on the road to recovery since. In the third quarter ended September 30, the company reported net profits of $1.2 million, a 32% increase from the like period of 2004, on revenues of $24.3 million -- a 6% hike from the year earlier period.
In preparation for reporting its fourth-quarter results, the company last month issued guidance stating it expects to post "profitable growth in Q4 2005" with total revenues ranging from $25 million to $26 million, which would represent a 5% to 9% increase over the same period last year.