SAN FRANCISCO (05/02/2000) - Mid-level ERP (enterprise resource planning) player Great Plains Software Inc. announced plans yesterday to acquire a smaller rival, Solomon Software Inc., in a cash and stock transaction valued at about US$140 million.
Great Plains said the acquisition will round out its family of business management applications and allow it to pick up Solomon's customer base of about 20,000 businesses. Perhaps more importantly, the deal gives Great Plains access to Solomon's workforce.
"With scarce IT resources it's a real benefit for us to be able to pick up 380 team members who have a ton of experience in this space," Great Plains spokeswoman Kim Albrecht said in a phone interview today.
Both companies make software that helps mid-size companies manage aspects of their business including financials, distribution, project accounting and manufacturing. Great Plains defines the mid-market space as companies with revenues of between $1 million and $250 million, according to Albrecht.
Great Plains' existing products, Dynamics and eEnterprise, play best at the low end and the high end of the midmarket arena, respectively, Albrecht said.
Solomon's Solomon IV product will help Great Plains do a better job of addressing customers in the middle, she added.
At least one analyst said there's likely to be some product overlap in the combined company. Great Plains' main motive for the merger may have been to acquire Solomon's workers, said Laurie Orlov, a research director for e-business applications with Forrester Research Inc. in Cambridge, Massachusetts.
The merger also handily eliminates one of Great Plains' many competitors, who also include Sage Group PLC, Lawson Software Inc., J.D. Edwards & Co. and Oracle Corp.
Terms of the definitive merger agreement call for Great Plains to issue about 2.6 million shares of Great Plains common stock and $35 million in cash.
Solomon will operate as a business unit of Great Plains, which will continue to develop the Solomon family of business applications, Great Plains said.
Michael Rupe, Solomon's president and chief executive officer, will be president of the new Great Plains business unit. Gary Harpst, Solomon's cofounder and chairman, will continue at the merged company in a "key product strategy role," Great Plains said.
The combined company will have more than 130,000 customers, 2,200 team members and a worldwide network of 2,000 channel partners, and combined revenue of about $225 million, Albrecht at Great Plains said.
Wall Street reacted kindly to the merger. Great Plains shares closed at $48.50 on the Nasdaq today, up almost 18 percent from yesterday's close. Solomon is a privately held company.
Great Plains, in Fargo, North Dakota, is at +1-701-281-6500, and on the Web at http://www.greatplains.com/. Solomon, in Findlay, Ohio, can be reached at +1-419-424-0422, and on the Web at http://www.solomon.com/.