Supply chain planning vendor Adexa is being purchased by auctioning vendor FreeMarkets for $340 million in stock. (All figures in U.S. dollars.)
The buyout is seven times Adexa’s revenue of $50 million, but according to Pierre Mitchell and Randy Weston of technology market analyst AMR Research, it’s much less than the Wall Street predictions of "$750M to $1B that Adexa might have fetched if it shopped itself around to larger e-commerce vendors like Ariba."
"Without a rich suitor to snatch Adexa up, desperation may have played a role in the bargain basement price," Mitchell and Weston add.
AMR says competitor Ariba was much smarter by not buying a vendor with a complex supply chain planning product, but rather buying Product Lifecycle Management (PLM) vendor Agile. Ariba has a very saleable product with a large installed base and reasonable integration scenarios with the Ariba Source product picked up from FreeMarkets competitor SupplierMarket.
"Although the acquisition makes sense in terms of trying to link strategic sourcing to supply chain management– something i2 Technologies realized a year ago when it bought Aspect Development for $8.9 billion–finding synergies between these two firms requires a stretch of the imagination," AMR Research stated in its analysis of the move. "FreeMarkets is trying to morph from a competitive reverse- auctioning services firm to a self-service sourcing application vendor… Adexa, for its part, focuses on complex software to automate supply chain collaboration, a term just not in FreeMarkets’ vocabulary."
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