JDA and Red Prairie Nuptials: Is the Cloud The Ideal Location for Enterprise Software Mergers?November 14, 2012 No Comments
By David A. Kelly, Upside Research
You’ve heard it before: Location, location, location. It matters for real estate and for weddings. The latest thought to ponder is whether the cloud is becoming the stylish location du jour for enterprise software mergers? We are about to test the theory with the most recently announced blockbuster merger between JDA Software and Red Prairie. This announcement, which occurred Thursday, Nov. 1st, followed just days after news reports that JDA was shopping around for a buyer.
The details of the merger are of interest. JDA will be taken private by privately-held Red Prairie, with the help of New Mountain Capital LLC, the private-equity firm that owns Red Prairie. The deal is expected to close by the end of this year, with the board of JDA already approving the terms. The purchase price of $45 per share will value JDA at approximately $1.9 billion. JDA reported $691 million in FY 2011 revenues, and it is estimated the company is on a run rate of $650 million for 2012.
JDA is a well-entrenched enterprise supply chain planning, sourcing, merchandising, and transportation management vendor. It has spent the past several years amassing a war chest of some of the most impressive supply chain companies, including most recently i2 and Manugistics. Red Prairie has many years’ experience in supply chain execution, workforce management, and more recently store operations and e-commerce. In the past few years, Red Prairie has been on a buying spree of its own as it has built an impressive e-commerce story, notably with its Escalate Retail acquisition in 2011. Together, the merged entity will provide manufacturers and retailers with end-to-end supply chain solutions that take product from conception to store shelf. At least, that is the vision.
And, it is a good vision – considering that the two companies can claim 82 of the top 100 global retailers and 87 of the top 100 manufacturers of consumer goods as customers, the combined company has the potential to significantly impact how the supply chain moves. The key to this illustrious merger lies in one of the hottest technologies of 2012: the cloud.
Both companies have made strong commitments to the cloud in the past year. JDA is about to launch its 8.0 release of JDA in early 2013, and the solution will be 100% cloud-based. Red Prairie started offering a hosted version of its Commerce platform, Commerce Cloud, earlier this year. One of the key synergies that both CEOs identified was in the architecture realm and the commitment to cloud.
So, the question remains, can the cloud provide the perfect location for these upcoming nuptials between two long-standing enterprise software vendors? Will it enable the newly united company to more quickly roll out a roadmap for combining their extensive list of end-to-end supply chain components? I guess only time will tell. What do you think?Analyst Blog