CMS/400 Could Switch Hands In $3 Billion Private Equity Deal

August 25, 2014 Alex Woodie

A London private equity firm is reportedly in the lead to buy Epicor Software, the American provider of ERP software for midsize manufacturers and distributors, including the RPG-based application formerly known as CMS/400.

According to a Reuters story last month, CVC Capital Partners bid of $3 billion was the highest bid to date. Epicor, which is currently owned by another London-based private equity firm, Apax Partners, put itself up for sale earlier this year.

Apax bought Epicor and another ERP software vendor, Activant Solutions (formerly Triad Systems) in 2011 and then merged them under the name Epicor Software. The combined entity had about 30,000 customers and $825 million in revenues at the time, Apax said.

In 2012, Apax engineered Epicore’s acquisition of Solarsoft Business Systems from Marlin Equity Partners for $155 million. Marlin had created Solarsoft in 2007 following the acquisition and mergers of two other ERP firms, XKO Software of the UK and CMS Manufacturing Systems of Toronto, the original developers of the CMS/400 package.

Heavily used by more than 200 midsized manufactures–including many in the Great Lake region’s automotive supply chain–the CMS/400 application had been continually developed under SolarSoft and Epicor. The product, which SolarSoft had called iVP but which Epicor rename CMS, was last updated in May 2013. CMS version 6.0 was certified by automotive giant Honda and brought enhancements in the areas of quality control, touch-screen capabilities in manufacturing execution systems, and enhancements to repetitive manufacturing processes.

Interestingly, while the Activant operation that was rolled into Epicor didn’t appear to sell any IBM i software directly, it did for a time own the code modernization tools that today are sold by Fresche Legacy of Montreal. The folks behind Fresche Legacy (previously known as Speedware) accepted a buyout offer from Activant in 2005 and then orchestrated a buyout in 2010.

While Epicor is no longer publicly traded, the company continues to report results. According to Reuters, it had sales of $978.3 million in 2013 and carries about $1.3 billion in debt. In 2012 and 2013, Epicor issued $340 million and $350 million of new debt respectively, to fund dividends to its private-equity owner, according to a May story in the Wall Street Journal.

The WSJ says Epicor is working with Jefferies Group LLC to seek buyers. The company is said to value itself in the $2.5 billion to $3.5 billion range.