Apps vendor Infor bulks up with Extensity, SU

Infor Global Solutions will buy two more enterprise applications players, Extensity and Systems Union Group (SU), the purchase-hungry company said Wednesday.

Infor wants to build sufficient critical mass through acquisitions to better position its offerings against market leaders SAP and Oracle.

Last week, Infor closed the US$1.4 billion purchase of SSA Global announced in May. That deal catapulted Infor into third position sizewise behind SAP and Oracle in the business applications market.

With the latest acquisitions under its belt, Infor has annual revenue of US$2.1 billion, offices in 100 countries and around 70,000 customers. The company also said it has a major presence among midsize applications customers, a market that both SAP and Oracle are targeting heavily.

Infor defines the midmarket as customers with annual revenues of between US$50 million and US$2 billion, according to Jim Schaper, Infor chairman and chief executive officer. Ninety percent of Infor's customers are in that space, he said during a Wednesday conference call.

Infor's acquisition of Extensity and Systems Union fills in a very large functionality gap in the company's offerings around performance management, Simon Jacobson, research analyst at AMR Research, said. Infor will also gain more financial applications of a better caliber than it already owns, he added.

Infor already had a close relationship with Extensity, both companies are funded by private equity firm Golden Gate Capital and Ken Walters, the chief executive officer of Extensity, was previously president and chief operating officer of Infor.

When Golden Gate agreed to buy business software vendor Geac for US$1 billion in November, it said it would break Geac into two. Infor gained Geac's ERP (enterprise resource planning) software, while Golden Gate formed a new firm, Extensity, to house Geac's financial and performance management applications. With Infor's purchase of Extensity, the Geac portfolio is reunited under one roof.

In March, as Golden Gate closed the Geac acquisition, Extensity formally came into being. At that time, Extensity laid out ambitious plans to become a US$1 billion independent applications company within three years. The new company had planned to close its first acquisition, the purchase of U.K. software firm Systems Union (SU) for just under US$400 million, in late July.

Infor didn't put a specific price on the acquisitions, but talked about a two-stage transaction financed by cash on its balance sheet and debt financing including a US$150 million in revolving credit, a US$2.2 billion term loan and a US$1.4 billion bridge.

Infor didn't acquire all of Geac last year because at that point neither SSA or SU were for sale, Schaper said. They only came onto the market in 2006.

Without SSA, Infor was focused purely on the low-end of the midmarket, while Extensity targeted the upper part of that market, he said. That picture changed when Infor purchased SSA whose user profile matched Extensity's.

Infor begun life in June 2002 when Golden Gate bought SCT's process manufacturing and distribution division and created a company then known as Agilisys. The firm took the name Infor after purchasing German midmarket enterprise resource planning (ERP) vendor Infor Business Solutions in February 2004.

Over time and the integration of many purchases, Infor has expanded its focus away from purely supply chain management software to include ERP, customer relationship management, enterprise asset management and analytics applications.

Infor runs its business on "two parallel tracks," Schaper said, letting customers choose between taking on a slew of integrated Infor products or opting for one or more stand-alone offerings that can interoperate with third-party applications.

What's needed from Infor now is a sense of its future strategy for all its products, analyst Jacobson said. Laying out a detailed product road map is particularly important as some Infor users start thinking about upgrading their aging hardware and perhaps also revisiting their choice of business applications.

Schaper said Infor does plan to release a detailed three-year product road map in September.

The company is working at integrating SSA, Extensity and SU into its operations and expects to make more announcements around a combined management team and staffing numbers in two weeks, he added.

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