Infor has entered into an agreement to acquire Datastream.
In a proposal that has the approval of both the Infor and Datastream boards, Infor is offering a cash deal, paying $10.26 per share which would value the transaction at approximately $205 million.
Infor targets verticals within the manufacturing and distribution sectors so Datastream’s asset performance management software will add complementary functionality. It is executing a strategy of growth by acquisition, and has made multiple acquisitions since 2002 to take is customer count to 18,000. With Datastream the total would rise to 24,700 across 140 countries, with Datastream adding 6,700 customers, making it one of the larger players in terms of customer numbers with annual revenue in the region of $600 million. That would probably put it into fourth place in the ERP market in terms of size after SAP, Oracle, and SSA Global.
There is a developing trend for vendors to retire from the harsh environment of the public company in favor of privatization backed by equity firms. SSA Global is the best known and its experience has been positive. With cash behind it and freedom from having to address short-term shareholder demands, it was able to under a highly successful transformation before going public again last year.
Infor is executing a similar strategy in that it is owned by private equity firms that are funding its growth-by-acquisition strategy. Lead shareholder Golden Gate is in the process of acquiring fellow ERP software and services provider Geac Computer Corp and taking it private.
However, Infor has major challenges ahead. Even though it has acquired several companies, it has not done much to integrate them or explain its long-term technical and business roadmap, other than saying it will develop a services-oriented architecture that will make upgrades and integration easier. The multiple acquisitions Geac has made and done little with also have to be factored in. This is where its private status should start to pay, enabling the time and privacy to develop the next stage of its strategy.
