SSA Global Gets Grabbed
Business software maker Infor will acquire SSA Global Technologies for approximately $1.4 billion to challenge market leaders Oracle Corporation and SAP. The new company, for which no name has yet been decided, is expected to be the third largest in the enterprise software market, with approximately $1.6 billion in revenue and 37,000 customers. The deal is expected to close in Q3 2006.
Infor, owned by private equity firms Golden Gate Capital and Summit Partners, makes supply chain management (SCM) and related software such as ERP, warehouse management, and BI, for manufacturing and distribution companies. SSA Global is an ERP solutions provider for the manufacturing, distribution, retail, and public services industries, though it also offers CRM, marketing automation, product life-cycle management, and SCM software. "The combination creates an alternative to SAP and Oracle," says Jim Schaper, Infor chairman and CEO. "We believe we are clearly in a class with those two vendors and have absolutely no problem in going toe-to-toe with them in the markets that we serve."
Infor is no stranger to acquisitions. The company has already purchased numerous ERP and SCM products from multiple vendors, including Baan, EXE, and Prism. Many of Infor's and SSA Global's product lines overlap, but, according to Judy Sweeney, senior vice president of research at AMR Research, Infor might suffer from having to condense so many product lines that are complementary but that compete. "Infor's business model began to break down once they became a consolidator and product lines started to overlap with the companies they bought," Sweeney says. "This acquisition has only compounded the situation threefold."
SAP has done a good job of capitalizing on the chaos and confusion that Oracle's buying spree has created--customers can expect SAP to announce a migration strategy to SAP products and away from SSA Global.
Sweeney says the deal is "bold, but risky," because there has "not been a successful consolidator vendor in the software market to date." She expects Infor to take SSA Global private, giving the company time out of the public eye to focus on future strategies. "Customers, on the other hand, will want to understand the product direction sooner rather than later," Sweeney says. "The deal will probably have little impact for existing customers this year, but the question remains with new customers, will they buy into the new company?"
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