Last Monday morning, Geac Computer Corporation woke up its investors with the news that it has agreed to be acquired by Golden Gate Capital in a $1 billion cash transaction. In addition, the acquiring firm revealed that it will hand over many of Geac's software products and all of its iSeries applications to Infor, a company that Golden Gate Capital funds. As a result, Infor will gain thousands of customers and significantly increase its strategic importance to both IBM and iSeries users.
Under the terms of the agreement, Golden Gate Capital will pay $11.10 per share for Canada-based Geac. Assuming that the acquisition receives approval from Geac's shareholders, the transaction should close during the first quarter of next year. Once it does, Infor will acquire Geac's System 21, RatioPlan, Runtime, and Streamline product lines. Among these products, the iSeries-based System 21--an enterprise resource planning (ERP) suite that supports almost 2,000 companies--accounts for the vast majority of revenues. RatioPlan is an iSeries-based product lifecycle management (PLM) and ERP solution for discrete manufacturers in Germany, Switzerland, and Austria. Runtime and Streamline are PLM and ERP solutions that run on Intel-based servers. By acquiring these products and the people who support them, Infor will become a $700 million company with almost 3,000 employees.
Geac's acquisition ends a long and difficult journey for the $440 million software vendor. While the company grew net incomes over the last three years, it failed to increase revenues in a market where it faced stiff competition from larger vendors. To gain the size it needed to succeed in a consolidating industry, Geac sought out software firms that it could acquire with its growing profits. However, the company could not find attractive candidates at reasonable valuations. As a result, Geac's board of directors faced increased pressure to put the company on the auction block. When it did, Golden Gate Capital's bid won the day.
A Shot in the Arm for System 21
The acquisition and transfer of products to Infor could prove to be a blessing for System 21 customers. While System 21 provides robust functionality for apparel, food and beverage, and automotive parts manufacturers, Geac has not been able to modernize the software as quickly as many of its rivals. In 2003, Geac did convert the code base to ILE RPG and enabled the applications to work with IBM's WebSphere middleware. However, the company found itself pressed for funding to pursue further enhancements while it was also trying to accumulate cash for acquisitions.
By contrast, Infor has adequate backing from its equity partners to pursue acquisitions and modernization projects in parallel. Just as importantly, it has a plan for making its disparate applications work with each other that should interest its newly acquired customers. In a conversation that I had last week with Tom Lynch, Infor's Chief Technology Officer and Senior Vice President of Marketing, I learned that Infor plans to create a Service-Oriented Architecture (SOA) that will act as an integration platform for its current applications. According to Lynch, the SOA will provide high levels of interoperability between System 21 and other Infor applications. That would be good news for mid-market customers because of the growing stable of iSeries applications that Infor owns. This includes products from acquired vendors such as Brain AG, Daly.commerce, and Lilly Software Associates.
It is likely that IBM's WebSphere middleware will play a significant supporting role in Infor's SOA. While Infor does not restrict itself to any single vendor's middleware portfolio, it likes what IBM is doing to make WebSphere as open and standards-based as possible. In addition, Lynch is very positive about what IBM is doing to modernize the iSeries and market it more aggressively. As a result, Infor has been building a stronger relationship with IBM and the iSeries Division in recent months. That should lead the iSeries Division to put more of a spotlight on Infor's solutions in 2006.
In short, if you are a Geac customer, I believe that Infor will do a good job of protecting your application investments. It is also likely that Infor will protect the jobs of many Geac employees with whom you work, as the vendor often hires most of the developers, support staff, and account representatives from the companies that it acquires. According to Lynch, Infor wants to brief Geac's customers on its plans for their products as early as possible. I would encourage you to attend any briefing that the vendor offers and be ready to ask questions. While I cannot guarantee it, chances are good that you will like many of the answers it has to offer.