Lawson Stockholders Approve Infor Merger. What’s Next?
July 11, 2011 Dan Burger
The fat lady has sung. The curtain closed last week on the IT opera featuring ERP software companies Infor and Lawson Software after Lawson stockholders voted to approve the merger with GGC Software Holdings, an affiliate of Golden Gate Capital, the money watchers that direct the moves for Infor.
The merger agreement was approved by approximately 69 percent of the total number of shares outstanding and by more than 98 percent of the shares voted. The merger-related executive compensation package was approved by more than 93 percent of the shares voted.
Previously, the Lawson board of directors unanimously approved the merger agreement, including the executive compensation arrangements, endorsing the merger as “advisable, fair to, and in the best interests of Lawson and its stockholders.” The Lawson board controlled approximately 9 percent of the company’s stock.
Activist investor Carl Icahn, who had a 10.8 percent stake in Lawson, also was in favor of closing the deal with Infor’s equity backers.
The deal, which began in March as an unsolicited takeover bid, was pegged at approximately $1.83 billion, net of cash and debts. The price per share was $11.25, which was approximately two bucks better than the share price one day before the proposed deal was announced. For those who recall Lawson stock at $2.99 per share in November 2008, the sale was a bit of good fortune.
With the addition of Lawson, Infor sits in third place behind only SAP and Oracle in the business application software market. Not bad for a company that’s only been around since 2002. During that brief time, Infor has acquired more than two dozen software companies.
Infor generates approximately $2.2 billion in revenues each year, but because it is a private company its profits are undisclosed. It has more than 70,000 customers worldwide, with an estimated 15,000 running applications on the OS/400 and i platforms.
Lawson has around 4,500 customers generating $745.1 million in revenues and $25.9 million in net income in its trailing four quarters. Its origins are in the OS/400 environment, but the percentage of customers running Lawson software on IBM midrange computers is unavailable; more than 50 percent is a fair assumption though.
Infor already had one of the largest IBM i customer bases in the business. Now it’s bumped up that figure by a couple of thousand.
There’s always an uneasiness within the IBM i customer base when a change of ERP software company ownership occurs. The JD Edwards to PeopleSoft to Oracle pathway has been described as treacherous by more than a handful of companies. Talk of “forced marches” into new technology territory and being “held hostage” by increased maintenance bills has had an echo effect ever since Oracle put its foot on this stage.
As a side note, Oracle was rumored to be interested in acquiring Lawson in the weeks before Infor made its offer. That might have caused at least some Lawson customers to acquire large collections of four-leaf clovers, horseshoes, or other lucky charms and hope for a different outcome.
To its credit, Infor has treated its IBM i installed base fairly so far. Even as it continues to roll out its Flex program, which relies on open service-oriented architecture–as the company calls its future product planning strategy–the introduction of products has not been particularly disruptive–certainly not anything that could be described as a rip and replace mandate. Unwarranted maintenance fee increases have not surfaced.
Customers running old releases of IBM i-based MAPICS, BPCS, PRMS, PRISM, Infinium, System 21, A+, KBM, Xpert, Daly.Commerce, BRAIN, CRM AutoRelease, and Anael products (each an ERP software manufacturer with a substantial AS/400 customer base that was purchased by Infor over the years) have Infor-recommended migration paths. But for now, at least, the customer controls the pace. At some point this will change. How soon it does will depend on the inertia of the customers and the patience of Infor.
Because, as you know, it’s never really over until the fat lady sings.