Further Consolidation in Distribution ERP: Infor Buys Lawson Software for $2 Billion

The market for distribution enterprise resource planning (ERP) software just gets cozier and cozier as software vendors of what’s becoming a mature product seek advantages in sheer size. A month ago, the news was about Epicor Software, Irvine, Calif., which specializes on the manufacturing side, and Activant Solutions, Livermore, Calif., which specializes in distribution and retail systems, both being bought by private-equity firm Apax Partners to create a software company with combined sales of approximately $800 million.

A bigger deal emerged last week, when a holding company affiliated with Atlanta-based ERP giant Infor agreed to pay almost $2 billion for Lawson Software, St. Paul, Minn., a rival provider of ERP systems for a variety of vertical markets.

Lawson announced in March that it had received an offer of $1.8 billion from GGC Software Holdings, Inc., which is an affiliate of Golden Gate Capital, Infor’s primary owner, and said it was hiring advisors to consider its options. After evaluating strategic alternatives and possible combinations with other competitors and finding no better offers, Lawson agreed to the Infor deal.

The companies will be combined to offer a suite of industry-specific applications serving more than 75,000 customers in verticals such as manufacturing, health care, distribution, public sector and hospitality.

“Lawson is a natural strategic partner for Infor, offering complementary software solutions that will extend our existing portfolio, particularly in areas such as healthcare, public sector, manufacturing and human capital management,” said Charles Phillips, CEO of Infor.

In markets such as wholesale distribution, where both companies already are active (others include healthcare, state and local government, fashion, food and beverage, equipment rental and manufacturing), Infor expects to be able to offer richer and deeper functionality.

“We plan to integrate many of the applications as soon after closing as possible, facilitated by a standards-based approach and the fact that both companies’ applications are already service-enabled,” Philips said. “We also plan to innovate and change how customers deploy, use, and upgrade enterprise applications. We have a long list of ideas to improve the customer experience and deliver value.”

Infor’s manufacturing, supply chain, product lifecycle, workforce and asset management products, combined with Lawson’s enterprise financials and human resources products will improve business process flows and offer single sign-on, common look-and-feel and seamless navigation across composite applications deployed on-premise and in the cloud, Infor said.

Infor has already announced a plan to hire 400 additional software engineers and ship approximately 60 percent more products and enhancements than last year. In addition, the company plans to reduce the need for customizations, take responsibility for more localizations, and make reports and user extensions easier to upgrade.

“We are pleased to have entered into a transaction that will offer Lawson stockholders an attractive valuation,” said Harry Debes, Lawson’s president and chief executive officer. “After a thorough examination of the strategic alternatives available to the company as well as extensive discussions with Golden Gate and Infor, Lawson’s board unanimously concluded that this transaction is in the best interests of the company and our stockholders.”