CGT Inside News - 4/26/2006

JDA Software to Acquire Manugistics
April 26, 2006 - Earlier this week, JDA Software announces a definitive agreement to purchase Manugistics for $211 million in cash, or $2.50 per share. The combined revenue potential of the two companies for 2006 is estimated at $390 million U.S. dollars. Expectations include significant recurring annual maintenance revenues of more than $170 million, and synergies in operations that could produce an annual cost savings of $25 to $30 million dollars within the first 12 months after closing.

This is JDA's largest acquisition to date, which will boost its customer base to more than 5,550 users. However, while the combined company may be well-positioned in the retail software market -- assuming it can resolve issues such as overlapping functionality and divergent technology platforms -- the deal does raise some questions within the consumer goods industry.

Manugistics has managed to retain its extensive consumer goods base despite major supply chain market shifts, but if the new company takes its eye off the consumer goods market, then that base is ripe for other competitors, particularly SAP, to swoop in with new demand-driven functionality. Considering the perception that consumer goods may take a back seat to retail offerings going forward, it is important that JDA and Manugistics reach out to their consumer goods customer base with reassurance. 
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