Infor puts Softbrands shareholders out of their misery

To which, the collective world of ERP pundits said, huh?

Softbrands, holders of the Fourth Shift manufacturing product who pinned their entire future business plan on plugging into SAP (and maybe one day being bought by them), decided to sell out to Infor and its Daddy Warbucks Golden Gate Capital, for $0.90 a share, or about $80 million. Well, $41.2 million anyway - the rest goes to paying off debt and preferred shareholders. It's still a nice premium over the $0.47 closing price last Thursday before the deal was announced, as SoftBrands CEO Randy Tofteland helpfully noted: "This transaction allows SoftBrands stockholders to realize significant value from their investment in our company over recent trading levels."

He then continued, "In addition, we increase value to customers through expanded products and services from the alliance with Infor."

Yeah, right. Longtime readers of this blog know what that means.

The 451 Group's China Martens (subscription only) ran down the interesting history of Softbrands, some of which was new to even your humble Graveyard blogger:

SoftBrands has a somewhat complicated history. Fourth Shift Corp was founded in 1984 and was acquired for $40m in cash in 2001 by AremisSoft, a public company that had already bought some hospitality software vendors. AremisSoft started to crumble amid class-action lawsuits and allegations of fraud later that year. SoftBrands came into being at the end of 2001 as a wholly owned AremisSoft subsidiary housing the manufacturing and hospitality products. AremisSoft filed for Chapter 11 bankruptcy protection in March 2002 and SoftBrands emerged as an independent entity after the reorganization. It raised $20m in external funding before going public in 2005. SoftBrands also made a number of purchases including Medallion, Infra Business Solutions and Hotel Information Systems.

The one thing everyone seems to agree on is that Fourth Shift's special arrangement with SAP is unlikely to survive the new Infor owners. Seeing as how they stopped selling the non-SAP flavor Fourth Shift completely some time ago, it's hard to see how Infor is going to do anything with the Fourth Shift product but dig a hole and throw it in.

what, Craig Conway wasn't available?

So, Thomas Kelly is out as Epicor CEO, after a less-than-successful standoff with a determined acquirer. And like Peoplesoft founder Dave Duffield, former Epicor boss George Klaus has stepped back in as president, CEO, chairman, and whatever else.

Will he be able to push through a sale with dignity? EPIC hasn't improved much since bottoming out at $3 after the November post below. Man, that $9.50 offer from October must be sounding pretty good.

Epicor update: Elliott decides to wait for after-Christmas sale

Apparently with EPIC stock hovering around $3, the private equity group hovering over the battered company has decided that its offer of $7.50, down from $9.50, might be a little rich.

Managing Automation reports that with the broader markets in the toilet, Elliott was able to pull out thanks to an "out" in their offer tied to any of the major indices going losing 10%. As anyone who's had the courage to open their 401(k) statements lately knows, that hasn't been a problem.

But speculation is that they'll be back in January, when proxy season heats up, and they can nominate new directors who might be inclined to consider a new offer. Should we start a pool here to predict the new offer? Betting closes January 15. And if Elliott asks, I'd be honored to serve as a director myself :)

Disclosure: I am the CEO of a competitor to Epicor, whose open source ERP solution is doing quite well.

From bad to worse for Epicor

A couple of updates from Managing Automation on the Elliott Associates private equity takeover bid for Epicor:

First, Elliott lowered its bid by $2/share. That's almost $120MM that EPIC shareholders won't see.

Second, MA's source "revealed that at least two other potential buyers have privately expressed interest in Epicor, and said both are software companies in the same Tier 2 space as Epicor and similar in size to the ERP vendor."

Hmm.... anyone want to speculate? Infor is too big, QAD is too small ... but Consona (M2M, Intuitive, etc.) might be just right. Who's the other one? Epicor has sales of $485MM (ttm).

Epicor on the blocks

Update 10/14: Epicor has rejected the offer of $9.50 per share. The stock opened at $6.61 today. Paging Carl Icahn...

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Well, many months later, but a similar story to the Golden Gate-Exact rumor below is unfolding. First noted by the research firm 451 Group (subscription only) a week ago, the hedge fund Elliott Associates bought a 10% stake in Epicor, and was making noises about forcing a sale. 451 took a dim few of the chances of such a sale to the likely strategic suspects (Microsoft, Oracle, SAP), and noted that "private equity-backed ERP rollups – which would have trouble digesting an acquisition the size of Epicor, in any case – have been sidelined recently."

Seems that Elliott has come to a similar conclusion, as they're now making an offer for the whole enchilada. Hope they're serious about being a "long-term player" because as 451 observed, it's hard to see a logical flip buyer anytime in the medium-term future.

But hey, maintenance revenues are up (as a percentage of revenue and earnings - WARNING, WARNING!) - so maybe they can just give the cow a good milking for a number of years, everybody can make some nice fees on the deal, and heck with the customers. Sorry, did that sound cynical?