Activant To Buy Intuit Eclipse Distribution Management Solutions Business

In yet another example of the continuing consolidation of the distribution software industry, Activant Solutions Inc. has agreed to acquire the Intuit Eclipse Distribution Management Solutions business from Intuit Inc.

Over the past three years, Activant Solutions, Livermore, Calif., has acquired several of its competitors, including Trade Service Systems and Prophet 21. The company also acquired Speedware Corp. in 2005, which included the Prelude Systems Inc. operating system. The acquisition of Intuit Eclipse will leave two large enterprise-resource planning (ERP) software companies, SAP, Walldorf, Germany; and Infor, Atlanta; and a host of smaller companies in the industry.

Activant Solutions provides business management solutions to small- and medium-sized businesses in three primary vertical markets: wholesale distribution, hardlines and lumber and the automotive parts aftermarket. Activant Solutions also provides software and related services for IDEA’s IDW2, a central repository for pricing and product data for the electrical wholesaling industry.

Activant Solutions has more than 30,000 users. The company has operations in California, Colorado, Connecticut, Illinois, New Jersey, Pennsylvania, South Carolina, Texas, Utah, Canada, Ireland and the United Kingdom.

Intuit Eclipse, Mountain View, Calif., provides business management solutions for wholesale distributors in segments ranging from electrical, plumbing, HVAC and building materials to industrial, janitorial and other durable goods supplies. Intuit had revenue of $2.3 billion in its fiscal year 2006. The company has more than 8,100 employees with major offices in the United States, Canada, the United Kingdom and other locations.

Activant has identified the wholesale distribution industry as a key vertical segment for the company’s growth. The acquisition of the Intuit Eclipse business will augment its customer base and expand its technology offerings in this segment.

“The acquisition of Intuit Eclipse is an important step in Activant’s vision to be a leader in vertical business management software solutions,” said Pervez Qureshi, president and chief executive officer of Activant Solutions. “Intuit Eclipse has built a loyal customer base with a strong product offering that will complement Activant’s technologies and give customers a broader set of solutions to grow their businesses and better serve their customers.”

“We are pleased to have Activant acquire our Intuit Eclipse business,” said David Merenbach, vice president of Intuit-branded software businesses. “The addition of the Eclipse product strengthens Activant’s suite of products targeting the wholesale distribution industry, and at the same time the divestiture allows Intuit to focus on its core businesses.”

Under the terms of the agreement, Activant will pay Intuit approximately $100 million in cash, subject to certain adjustments, to purchase the Intuit Eclipse business. The agreement is subject to customary closing conditions and is expected to close in August.

According to ElectricalTrends, www.electricaltrends.blogspot.com, a blog recently launched by Channel Marketing Group, Raleigh, N.C., and Allen Ray Associates, Kennedale, Texas, Activant’s acquisition of Eclipse could benefit to Eclipse distributors and the electrical industry. “Eclipse distributors will get the benefit of access to additional Activant services such as Trading Connect, Vista Information Services and possibly other services. We presume there won’t be any changes to the system and to the customer service component,” said David Gordon and Allen Ray on their blog.

One benefit of the acquisition, they said, would be Activant’s ability to quickly develop solutions that would benefit a greater number of distributors. “Activant is a key partner for IDEA in supporting the IDX2 and IDW2, so we think this can only help the industry with more distributors eventually on a more common platform (or similar functionalities — although we surmise that they will have some differences to justify different brands,” they said on the blog.

Ray and Gordon said on their blog that one downside from an industry viewpoint is that there are now only two broad-based major ERP providers (Activant and Infor (NxTrend)). SAP is making inroads at larger independents and some national chains, but there are lots of smaller companies in the industry, they said. While price competition could be slightly affected, Ray and Gordon believe distributors may see higher monthly support and training fees over the longer term.

IDEA has had a nine-year relationship with Activant, and a contract with Activant to be its service provider for both IDX2 and the IDW2. Mike Rioux, head of IDEA, said the acquisition of Eclipse will “greatly facilitate” IDEA’s ability to interface its products via the industry data warehouse and industry data exchange with the Eclipse customers.

“We are by mandate impartial to every software supplier, especially on the distribution side, so it becomes a little bit of a challenge when companies acquire other software companies. But as they continue to get bigger, it sort of reduces that potential conflict,” said Rioux.

“For now, we have a very good relationship with Activant’s Prophet 21 group. We have a good relationship with Eclipse as well, but this will make it even easier, and we hope to maintain our positive and productive relationship with SAP as well as Infor Global Systems and a lot of the other smaller ERP companies out there. But this one certainly helps us interface our products with both the Prophet 21 and the Eclipse customers because of our common relationship with Activant and the system that they provide to us.”