During the last few years, Geac Computer Corporation Limited (TSX: GAC), a large Canadian supplier of enterprise management software has had a roller coaster ride. It started with a rampant acquisition stint during the 1990s (see Geac Computer Corporation: Mastering Growth by Acquisitions), followed by a subsequent near-death experience and causal resorting to lifesaving divestitures in 2001 (see Geac Decomposes To Survive), only to see the company come back around, achieve stable financial performance, and articulate a clear strategy to move away from its all-but-failed business model of selling maintenance and services for outdated applications. The result is a number of recent new contract wins, rejuvenated product launches and a return to the acquisition trail amid the ongoing consolidation slugfest, but this time in a seemingly more thought-out and digestible manner.
To that end, Geac announced that on July 15, 2003 the Federal Trade Commission granted early termination of the waiting period required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to Geac's proposed acquisition of Comshare Inc. (NASDAQ: CSRE), a provider of corporate performance management (CPM) software. On July 1, Geac announced that it has commenced, through its indirect, wholly owned subsidiary Conductor Acquisition Corp., a cash tender offer to purchase all of the outstanding shares of common stock of Comshare. The tender offer was made pursuant to the previously announced definitive merger agreement between Geac and Comshare for US $52 million in cash, dated June 22. Under the terms of the definitive agreement, Comshare shareholders will receive US $4.60 in cash for each share of Comshare common stock held, representing a 31% premium to Comshare's trailing 20-day average share price at the time. The Board of Directors of Geac has received a favorable independent fairness opinion respecting the financial terms of the Comshare merger from Yorkton Securities Inc.
Geac believes this latest acquisition should broaden its business performance management (BPM) offering with the addition of the Comshare MPC ("Management, Planning & Control") suite of planning, budgeting, forecasting, financial consolidation, and management reporting and analysis solutions. The Comshare acquisition follows the successful purchase of travel and expense management software provider Extensity on March 6, 2003. Geac plans for the tender offer to close by August 2003 and expects the transaction to be accretive to earnings 90 days following completion of the merger as the business is integrated into existing Geac operations.
With its 500 customers and 300 employees, Comshare is expected to add roughly 12% to Geac's annualized revenue, based on the last twelve months of reported revenue from each company, and Geac aspires to participate in a new US $1 billion market that is growing more than 10% per year based on some analysts' predictions. Following the close of the transaction, Geac plans to "eat its own dog food", i.e. to standardize on Comshare MPC for internal use by its divisions worldwide and begin to implement the suite, replacing Geac's current budgeting and consolidation applications. Comshare products will be integrated into Geac's existing application offerings through the use of Geac's application integration framework, which is designed to facilitate integration and interoperability between disparate applications.
The rationale for the acquisition was based on a global assessment of Geac customers' IT requirements, in which approximately 33% of the company's ERP customers surveyed said that they were interested in acquiring improved business intelligence (BI) and reporting tools, such as budgeting, planning and forecasting. These organizations are looking for products that enable them to extract more value from their investment in various Geac's ERP products to monitor and manage overall performance more effectively. Additionally, enterprises face the increasing need for integration, analytics and real-time data access to comply with stricter public disclosure mandates of late.
In addition to pursuing strategic acquisitions, Geac has demonstrated a reliance on internal development as well. In April 2003, the UK division of Geac launched Geac System21 Aurora, a culmination of the most significant investment in the System21 product in recent years (see Geac Hopes To See System21 Shine Again Like 'Aurora'). Combining solid ERP functionality with real-time process management capabilities, System21 Aurora is designed to improve enterprise performance at many levels including operational, process and corporate. It also offers a collaborative supply chain management (SCM) solution that will supposedly leverage the newest technologies and provide users with access to all their business applications through a single web-based user interface (UI).
System21 Aurora is scaled for mid-sized enterprise needs, particularly in the food & beverage, apparel & textiles, fast moving consumer packaged goods (CPG), wholesale distribution and manufacturing sectors, where Geac already has a strong market presence, with a global customer base of approximately 1,600 companies. The product is the culmination of extensive product development, with a strong focus on customer requested enhancements. It provides a process-modeling engine that should enable organizations to map out key operational processes, streamline them, and then activate them to become live business flows of activities and data, with the software automatically generating alerts for manual intervention when required.
To that end, Geac announced that on July 15, 2003 the Federal Trade Commission granted early termination of the waiting period required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to Geac's proposed acquisition of Comshare Inc. (NASDAQ: CSRE), a provider of corporate performance management (CPM) software. On July 1, Geac announced that it has commenced, through its indirect, wholly owned subsidiary Conductor Acquisition Corp., a cash tender offer to purchase all of the outstanding shares of common stock of Comshare. The tender offer was made pursuant to the previously announced definitive merger agreement between Geac and Comshare for US $52 million in cash, dated June 22. Under the terms of the definitive agreement, Comshare shareholders will receive US $4.60 in cash for each share of Comshare common stock held, representing a 31% premium to Comshare's trailing 20-day average share price at the time. The Board of Directors of Geac has received a favorable independent fairness opinion respecting the financial terms of the Comshare merger from Yorkton Securities Inc.
Geac believes this latest acquisition should broaden its business performance management (BPM) offering with the addition of the Comshare MPC ("Management, Planning & Control") suite of planning, budgeting, forecasting, financial consolidation, and management reporting and analysis solutions. The Comshare acquisition follows the successful purchase of travel and expense management software provider Extensity on March 6, 2003. Geac plans for the tender offer to close by August 2003 and expects the transaction to be accretive to earnings 90 days following completion of the merger as the business is integrated into existing Geac operations.
With its 500 customers and 300 employees, Comshare is expected to add roughly 12% to Geac's annualized revenue, based on the last twelve months of reported revenue from each company, and Geac aspires to participate in a new US $1 billion market that is growing more than 10% per year based on some analysts' predictions. Following the close of the transaction, Geac plans to "eat its own dog food", i.e. to standardize on Comshare MPC for internal use by its divisions worldwide and begin to implement the suite, replacing Geac's current budgeting and consolidation applications. Comshare products will be integrated into Geac's existing application offerings through the use of Geac's application integration framework, which is designed to facilitate integration and interoperability between disparate applications.
The rationale for the acquisition was based on a global assessment of Geac customers' IT requirements, in which approximately 33% of the company's ERP customers surveyed said that they were interested in acquiring improved business intelligence (BI) and reporting tools, such as budgeting, planning and forecasting. These organizations are looking for products that enable them to extract more value from their investment in various Geac's ERP products to monitor and manage overall performance more effectively. Additionally, enterprises face the increasing need for integration, analytics and real-time data access to comply with stricter public disclosure mandates of late.
In addition to pursuing strategic acquisitions, Geac has demonstrated a reliance on internal development as well. In April 2003, the UK division of Geac launched Geac System21 Aurora, a culmination of the most significant investment in the System21 product in recent years (see Geac Hopes To See System21 Shine Again Like 'Aurora'). Combining solid ERP functionality with real-time process management capabilities, System21 Aurora is designed to improve enterprise performance at many levels including operational, process and corporate. It also offers a collaborative supply chain management (SCM) solution that will supposedly leverage the newest technologies and provide users with access to all their business applications through a single web-based user interface (UI).
System21 Aurora is scaled for mid-sized enterprise needs, particularly in the food & beverage, apparel & textiles, fast moving consumer packaged goods (CPG), wholesale distribution and manufacturing sectors, where Geac already has a strong market presence, with a global customer base of approximately 1,600 companies. The product is the culmination of extensive product development, with a strong focus on customer requested enhancements. It provides a process-modeling engine that should enable organizations to map out key operational processes, streamline them, and then activate them to become live business flows of activities and data, with the software automatically generating alerts for manual intervention when required.
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