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Lawson Accepts Infor's $2 Billion Bid

Apr 26, 2011 (11:04 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=229402279


A group led by enterprise resource planning vendor Infor announced on Tuesday that rival Lawson Software has agreed to be acquired for $2 billion.

If the deal is completed in the third quarter as planned, Infor will become the clear, though distant, number-three ERP software supplier after SAP and Oracle. After adding Lawson, Infor's revenues should exceed $2.5 billion, compared with $17.6 billion in revenue for SAP in 2010. Oracle does not break out its applications revenue.

Charles Phillips, Infor's CEO since October and the former president of Oracle, promised rapid product integration and development to take advantage of the best software from both companies.

Lawson's products will "receive additional investment and enhancement, and we plan to deliver incremental value quickly," Phillips stated in an open letter to Lawson customers. "Infor is already on a path to accelerated innovation and recently announced a significant investment of 400 additional engineers in research and development."

Infor made its future product direction quite clear, focusing on Lawson's enterprise financial and human resources applications as cornerstones of a combined product suite along with Infor's manufacturing, supply chain, product lifecycle, workforce, and asset management applications.

Infor's unsolicited bid for Lawson wasn't made public until March, but Lawson executives acknowledged today that talks began in early January. The two companies have since worked together to assess cross-industry strengths and to hash out plans for a combined offering, according to Duncan Angove, Infor's president of products, marketing and support, one of several senior Infor executives brought in by Phillips when he joined the company last October.

"At the time of closing or very close to it, we intend to ship high-value integrations and innovations immediately," Angove said.

Infor's asset-management and time-and-attendance applications, for example, are to be integrated with Lawson's healthcare applications. Angove said Infor also plans to create a two-tier financial offering by integrating Lawson's financial apps for headquarters operations with Infor's SunSystems financial app as a low-cost, rapid-install alternative for business units and subsidiaries. Initial integrations will be basic, Angove said, focusing on Lawson's back-end integration layer and Infor's user interface layer.

Angove talked about challenging SAP and Oracle by offering "a genuine third choice," but the company is likely to continue to focus on midsize companies and market niches rather than the large-enterprise and mainstream demands dominated by SAP and Oracle.

Lawson has strengths in healthcare, state and local government, wholesale distribution, fashion and retail, food and beverage, equipment rental and services. Infor focuses heavily on midsize manufacturers and consumer package goods, and it will combine strengths where it formerly competed with Lawson in healthcare, state and local government, and retail.




Infor's most direct competitor is likely to be Microsoft, with its $1.3 billion Dynamics applications business, although that's one company that has actually succeeded in breaking into the large-enterprise customer ranks, according to Forrester analyst Paul Hamerman.

"Microsoft has been one of the most innovative vendors in ERP, and it has an opportunity to really step up its game with the product-level investments it has made in cloud computing," Hamerman said.

Infor and Lawson both have software-as-a-service products and cloud-computing strategies, but nothing on the scale that Microsoft has mounted. Angove said Infor will "challenge the way things are done" and give customers options to run in the cloud, on premises, or in hybrid scenarios.

Infor might stage early application implementations or localizations in the cloud and give customers the option to move those deployments on premises or leave them running in the cloud, Angove said.

Infor also will square off against Sage and a newly competitive Epicor. Apax Partners announced early this month that it plans to buy and combine the now-separate ERP vendors Epicor and Activant in a deal valued at $2 billion. Operating as Epicor, the new company will combine the manufacturing strengths of Epicor with the distribution and retail strengths of Activant.

Assuming the deal goes through, Infor's acquisition will mark the end of independence for St.Paul, Minn.-based Lawson, a venerable company with a 30-plus-year history in applications. Infor and partner Golden Gate Capital had to sweeten their initial $1.8 billion offer for the company. Under the terms of the merger agreement announced Tuesday, stockholders of Lawson will receive $11.25 per share in cash and the company will be acquired by GGC Software Holdings, an affiliate of Golden Gate Capital and Infor.

In a statement, Lawson said its board explored other options, including soliciting bids from other vendors, but it concluded the merger was in the best interest of stockholders. Infor, meanwhile, gains much stronger finance and human resources applications that those in its current portfolio.

As for Lawson's customers, Hamerman of Forrester didn't see much upside. "Infor has a very lean support organization," he said. "I'd expect them to make cuts in Lawson in support and customers to see degradation in responsiveness on maintenance over time."

Reports of poor service "are part of Infor's reputation of the past," responded Lawson media relations executive Terry Blake. He pointed to Infor's new management team and Phillips' open letter to Lawson customers, in which he promised the company would be a "reliable, proactive and responsive partner."