Tuesday, August 19, 2003

Who's next on SSA's shopping list?

According to Michael Dominy, senior analyst with the Yankee Group, SSA may target additional vendors in the supply chain management space, following its acquisition of EXE Technologies announced yesterday. Quoted in an article in the Daily Deal, Dominy specifically mentions Adexa, Prescient Systems, and Optiant. Adexa (formerly known as Paragon) is a supply chain vendor with strength in the automotive and high tech electronic verticals. In 2001, Freemarkets nearly acquired Adexa for $340M but called it off due to weak market conditions. Adexa would certainly go for less today. Prescient Systems is a small (50 employees) supply chain planning vendor focused on the consumer products vertical. Early in 2003, Prescient announced it had doubled its license revenue over the previous year, bucking the negative trend generally. Optiant (formerly SupplyChange) is small (42 employees) provider of supply chain analytics and optimization solutions. With overall supply chain technology spending flat, niche vendors such as Adexa, Prescient, and Optiant are probably better off as part of a larger portfolio, such as SSA's.

Update, Aug. 22: ARC Advisory Group's John Moore speculates that MAPICS (MAPX) may be SSA's next target, based on the fact that General Atlantic Partners (GAP), which owns 25% of SSA, also has a "sizeable stake" in MAPICS. However, in my opinion, MAPICS is not acting like a company that wants to be acquired. It just made the strategic move to acquire Frontstep, giving it a full product suite based on Microsoft .NET architecture. And it has lowered its cost structure, allowing it to maintain profitability even in these weak market conditions (see my post on August 5). Although GAP's 30% stake in EXE Technologies was, no doubt, a major factor in SSA's acquisition of EXE, GAP only owns 6% of MAPICS--not enough to ensure a deal, although they surely could initiate a discussion. Watch whether GAP tries to increase its stake in MAPICS. That would be a sign that a deal might be coming.

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