Update: Lawson accepts $2 billion takeover bid by Infor

The combined company will be one of the industry's largest ERP vendors after SAP and Oracle

Lawson Software has agreed to be purchased by an Infor affiliate GGC Software Holdings for roughly $2 billion, the company announced Tuesday.

The deal will create one of the industry's largest ERP (enterprise resource planning) software vendors after SAP and Oracle, and is expected to close in the third calendar quarter of this year.

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The announcement comes about six weeks after Infor first made an unsolicited offer for Lawson, which is known for its strong presence in verticals such as health care.

While many observers expected counteroffers from the likes of Oracle to emerge, none did publicly.

However, in a statement Tuesday, Lawson said it had "conducted a comprehensive market assessment and contacted other potential acquirers including competing global providers of enterprise applications and financial buyers, a process that did not result in a superior proposal."

"We are pleased to have entered into a transaction that will offer Lawson stockholders an attractive valuation," Lawson CEO Harry Debes said in a statement.

GGC Software Holdings is linked to Infor and its private equity firm backer Golden Gate Capital. Privately held Infor, which has grown through a long series of acquisitions, has reported revenue in the neighborhood of $2 billion. Lawson reported revenues of $736.4 million in its 2010 fiscal year.

Infor last year appointed former Oracle president Charles Phillips as CEO. Phillips is credited with playing a key role in Oracle's many purchases of software vendors.

"Lawson is a natural strategic partner for Infor, offering complementary software solutions that will extend our existing portfolio, particularly in areas such as health care, public sector, manufacturing and human capital management," Phillips said in a statement.

Infor is "obviously very excited" about the deal, said Duncan Angove, president of products, marketing and support, in an interview. "For us to pick up these applications, it really accelerates our strategy."

The company has "no intent to rationalize or consolidate" Lawson's products, he said. Instead, the focus will be integrating them with Infor's own applications, he said.

Phillips elaborated on the theme in an "open letter" to Lawson users. "The product lines are complementary, not overlapping," he wrote. "For example, Lawson's expertise in the healthcare industry will be enhanced by Infor's Enterprise Asset Management which will be targeted for large hospitals. This is truly a scenario where 1+1=3."

Angove couldn't say whether Infor will make any cuts in Lawson's workforce. "In any acquisition we look for efficiencies ... but that's not the driver of this deal," he said.

But more engineers will be working on the Lawson products next year than there are now, according to Angove. Infor recently announced plans to hire 400 additional technical staffers. Angove left open the possibility that Infor could add even more after the Lawson acquisition closes.

Overall, Lawson customers that are concerned about the future should rest easy, according to Angove.

"I think this is a better home for Lawson than pretty much any place it could have ended up," he said. "We went after Lawson for strategic reasons. We wanted Tier 1 financials and [human capital management] applications that get us in leading positions in new verticals."

A Lawson spokesman noted that for now, the companies remain separate entities.

"Until there are plans in place after the deal closes, [customers'] investments in the products are intact, and the road maps we have shared with them are also intact," said Terry Blake, vice president of corporate communications.

Blake declined to identify other vendors Lawson spoke with regarding a takeover.

Companies such as Oracle or SAP may have felt there was simply too much product overlap between their own portfolio and Lawson's, said analyst Ray Wang, CEO of Constellation Research.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's email address is Chris_Kanaracus@idg.com.

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