November 9, 2009, 12:00 AM

JDA agrees to acquire i2 Technologies for close to $400 million

In a deal valued at about $396 million, retail enterprise software provider JDA Software Group is acquiring supply chain technology company i2 Technologies.

In a deal valued at about $396 million, retail enterprise software provider JDA Software Group Inc. has agreed to acquire supply chain technology company i2 Technologies Inc.

The agreement comes a year after the two companies failed to come to terms on a prior effort by JDA to buy i2. The current agreement, which has already been approved by each company’s board of directors, comes as the economic downturn forces companies to make their supply chains as efficient as possible, JDA CEO Hamish Brewer says.

Bringing i2 into JDA will create a combined company offering comprehensive web-enabled supply chain technology that will complement JDA’s existing software in such areas as merchandising, revenue management and supply chain planning, Brewer says.

“Our strategic rationale for acquiring i2 is even more compelling today than it was a year ago,” he says. “The challenges of the economic crisis have focused the market’s attention on the disciplines of supply chain planning and JDA has established a leading role in this active market. Integrating i2’s solutions and expertise will only expand our opportunity to build substantial new shareholder value over the coming years.”

I2 brings to JDA more depth in areas including demand planning, transportation management and supply network modeling, which uses software to come up with more efficient ways to receive product from suppliers and managed them across multiple distribution centers, says Kevin Marah, chief strategy officer at research and advisory firm AMR Research Inc.

The acquisition agreement also provides assurance to i2’s customer base that it will have a long-term future as part of a strong parent company, he adds. “I2 has strong products in extensive use in the field, and the only issue in the minds of customers has been if i2 was in it for the long run,” he says.

JDA says it expects many members of i2’s management team to join the combined company, though it hasn’t provided specifics. “While it is expected that a number of i2 executives may pursue other opportunities after the acquisition closes, JDA hopes to retain and expects to welcome a significant percentage of i2’s current management team to roles in the newly combined company,” a spokeswoman says.

She adds that the JDA will continue to maintain the i2 brand, but that the two companies will be folded into a single operating company under the JDA name.

JDA intends to raise about $275 million in financing that, combined with cash and stock, will offer i2 $18 per share based on JDA’s closing stock price of Nov. 4. If JDA is unable to raise sufficient funds, it will offer a higher percentage of JDA stock along with cash to meet the $18 per share acquisition price. JDA says it has already received a commitment from Wells Fargo Foothill and Wells Fargo Securities to help finance the alternative acquisition plan.

Goldman Sachs served as the exclusive financial advisor to JDA and DLA Piper US LLP acted as JDA’s legal counsel. Thomas Wiesel Partners was the exclusive financial advisor to i2 and Munsch Hardt Kopf & Harr P.C. acted as i2’s legal counsel.

The acquisition, which is subject to stockholder approval and regulatory review, is expected to close in the first quarter of 2010. JDA’s stock, which is traded on the NASDAQ exchange under the symbol JDAS, was trading at about $23 per share at mid-day today, up from just under $20 on Nov. 5, the day JDA announced the acquisition agreement.

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