Manugistics Goes Out with a Whimper
The big financial news this week in the Spend Management technology world was JDA Software announcing its acquisition of Manugistics. According to Lora Cecere's summary from the AMR peanut gallery, "JDA Software is acquiring Manugistics for $211M in cash, approximately 1.2 times Manugistics’ FY06 revenue. The combined 2006 revenue potential of the two companies is $390M, with 43% based on recurring maintenance revenue. This transaction has the potential to make JDA the fourth largest player in the supply chain management (SCM) market." Check out the rest of Lora's take if you're interested in the deal. She gets into all of the important points, and there's no need to repeat her excellent analysis here. Needless to say, the multiple of the deal stinks, and I know this is going to have a negative impact on valuations of some deals still in the venture stage in the supply chain world. But heck, it's good to see that Manugistics will not suffer a long, painful death in the Oracle underworld (one wonders, given the low valuation, why Oracle was not more aggressive in the bidding given their continued interest in buying marketshare in the applications market).
- Jason Busch
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This deal is a sad end to a once proud company. In the last decade, MANU has gone through three CEOs and has seen its bookings and license revenues virtually evaporate. The notion that Oracle or SAP would've benefitted from acquiring the company avoids the hard questions of how much its going to cost to upkeep the existing customer base (which is chock full of heavily customized SCM implementations).
Curious to get your thoughts on my post if you have a chance...
http://woodrow.typepad.com/the_ponderings_of_woodr...
Saw your comments over on my blog and thank you. I agree, just doesn't "feel" right. But, if you look at M&A across the software sector, it's been premised on a multiple of future maintenance revenue discounted back to present value. While MANU has a large maintenance revenue business, the fact its bookings have fallen to virtually nil could indicate the quality and sustainability of its maintenance stream is limited relative to other companies out there.
I guess we'll see in a year or two whether this deal had more value to customers, partners and investors than we thought.
In the meantime, when is DemandTec going to be acquired and by what company?
In all seriousness, I am guessing vert to be the next company to join the consolidation. They are runnin out of cash and will have a tough time getting back on track unless they had a breakout qtr in q-1. They have a great list of companies they work with but havent been able to close the gap to profitabilty. This sector is heating up and they could be a great addition for a larger entity.
http://supplychain-logistics.com/civicspace/node/7...