Within the past few days, there has been a marked uptick in merger and acquisition activity involving business process and decision-making support surrounding the broad umbrella of what is today supply chain management. Three different announcements, each involving OpenText, Descartes Systems and JAGGAER demonstrate various strategies being played out for augmenting technology, business services and vertical industry depth.

As 2017 began, one of our ten annual predictions called for a renaissance in supply chain focused business services and technology investments supporting augmented and ever-changing business process and decision-making needs. We anticipated that investment areas would include digital supply chain transformation, data visualization and more predictive analytics and broader end-to-end supply chain visibility. 

We anticipated that with a continued robust investment cycle, merger and acquisition activity would accelerate among technology and services providers, particularly in the notions of blending technology, software, and managed services.

OpenText to Acquire Covisint Corporation

Enterprise Information Management and Supply Chain Business Network provider OpenText announced this week that the provider has entered into a definitive agreement to acquire Covisint Corporation, an automotive industry focused Cloud platform providing digital connectivity of business processes and Internet of Things (IoT) enabled processes. The reported transaction purchase price is approximately $103 million of market value or $75 million on enterprise value.

According to the announcement, the acquisition is expected to deepen Open Text’s EIM offerings with the addition of a cloud-based IoT platform, as well as expand the Canadian firm’s presence within Automotive industry supplier relationships and supply chain business process collaboration. The announcement indicates that Covisint will be integrated into the OpenText Business Network, a portfolio of cloud technology and software applications that facilitates B2B network messaging and compliant information flows.

Our automotive readers may well have knowledge of Covisint’s legacy dating back to the late nineteen-nineties as one of the first industry-specific B2B marketplaces. Of late, this provider has been messaging capabilities for building a portfolio of capabilities to support digital transformation that includes B2B messaging and process orchestration, identity, and verification, and IoT enablement.

The OpenText Business Network has provided a special emphasis on Automotive industry B2B business network needs and in May of this year, closed on the $100 million acquisition ANXeBusiness Corp. (ANX), a provider of cloud-based information exchange services to US Automotive and Healthcare industries. That acquisition was focused on simplifying relationships among the global automotive trading community, and now with the addition of Covisint, should strengthen such capabilities. This latest acquisition is expected to close in the third quarter, subject to customary closing conditions.

 

Descartes Systems Acquires PCSTrac Business

Descartes Systems Group and its associated Global Logistics Network (GLN), announced this week that it has acquired substantially all the assets of the business of PCSTrac, Inc. including certain related assets of Progressive Computer Services Inc. dba PCS Technologies (collectively referred to as “PCSTrac”). The reported acquisition price is $11.25 million.

US-based PCSTrac helps specialty retailers and their logistics service providers collaborate to improve carton-level visibility for shipments from distribution centers (DCs) to stores. PCSTrac’s technology provides visibility and insight into the store replenishment supply chain, helping increase sales, enhance loss prevention, and improve inventory control. Like Descartes’ Bearware platform, PCSTrac also supports pool distribution, which helps retailers reduce logistics costs and minimize store disruptions by eliminating unconsolidated direct shipments from suppliers and retailer distribution centers.

According to the announcement, pool distribution has become an increasingly important strategy in leveraging a growing community of retailers and pool carriers to lower distribution costs, increase delivery frequency, and improve overall replenishment performance. Effective pool distribution requires a common technology system for participants that helps standardize the process and provides carton level visibility across the entire store replenishment lifecycle.

Similarlyarly, Descartes had previously acquired BearWare to augment capabilities to manage the increasingly complex omni-channel retail supply chain environment. Both acquisitions plan to augment the Descartes Global Logistics Network with carton-level tracking and pool distribution support.

 

JAGGAER And POOL4TOOL Merger

U.S. based procurement Source to Pay (S2P) provider JAGGAER, (formerly known as SciQuest), has merged with European-based POOL4TOOL, a specialized direct procurement technology provider. According to this specific announcement, this merger is designed to provide a global footprint of support for both indirect and direct procurement spend processes, and allow the combined entity to execute on a vision of a complete Cloud-based digital procurement platform.

JAGGAER had previously announced its intention to provide deeper vertical industry support. With this newly announced merger, JAGGAER’s footprint in Europe, Asia and the Middle East can expand as well as deliver a global presence for its data centers and customer support. It also adds direct material capability in the North American market. The merger further enables JAGGAER to extend its leading position in higher education procurement process support to expand within Europe.

POOL4TOOL, an admittedly different name for a direct procurement tech provider, brings over 300 customers to the merged entity. The direct procurement provider has further built bidirectional data and information integration capabilities with SAP. Both providers have footprints in automotive, manufacturing, chemical, pharmaceutical and sciences, along with retail industry processing a reported $65 billion in annual indirect or direct procurement spending.

As is often the case, mergers of this type are highly dependent on the timing and integration of two different technology platforms.

Thus, within a period of week, evidence, and demonstrations of individual technology vendor’s strategic positioning points to increased strategic activity. In addition, private equity and other investment firms continue to invest hundreds of millions of dollars in start-ups focused on hot emerging areas including digitalization of end-to-end supply chain capabilities.

However, at mid-year, still missing is the consummation of our prediction of a blockbuster M&A announcement.

Bob Ferrari

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