Infor's offer for Lawson could spark bidding war

Infor has offered US$1.8 billion for rival ERP vendor Lawson; will HP, IBM and Oracle counter?

By Chris Kanaracus, IDG News Service
March 14, 2011 03:08 PM ET

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Infor's roughly US$1.8 billion offer for Lawson Software will likely be far from the only salvo in a bidding war for the ERP (enterprise resource planning) vendor that could see the likes of IBM, Hewlett-Packard and Oracle enter the fray, according to some analysts.

Lawson disclosed Infor's offer late Friday after several days of rumors that the company was seeking a buyer.

The combined company would approach $3 billion in revenue. Lawson reported $736.4 million in revenue during its fiscal 2010, while privately held Infor has listed its revenues at over $2 billion.

Infor's offer of $11.25 per share, made along with its parent private equity firm Golden Gate Capital, was lower than Lawson's closing stock price on Friday. Observers expect that bid is simply an opening gambit, with Lawson fetching a significantly higher price if it is indeed sold.

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Observers have expected Lawson to go on the sale block since last year, when activist investor Carl Icahn took a stake in the company. Icahn is known for aggressively pushing companies he invests in to make moves he believes would increase shareholder value.

But the fingerprints of recently appointed Infor CEO Charles Phillips are all over the Lawson deal as well, said analyst Ray Wang, CEO of Constellation Research. Phillips is a former co-president of Oracle, who along with co-president Safra Catz, engineered the vendor's long run of acquisitions in recent years.

Growth by aggressive acquisition is not an easy strategy to pull off, Wang added. "The balance is between paying debt, retaining customers and driving new business."

But Lawson has solid finances as well as strong products in areas like health care, manufacturing and finance, which fill some key gaps for Infor, analysts said.

Lawson would also give Infor some valuable expertise, according to John Henley of the consulting firm Decision Analytics, which focuses on Lawson products.

"Infor has a much broader product line -- horizontally -- than does Lawson. But they lack the BI (workflow/dashboards/reporting/notification services) solutions, which Lawson has been pretty successful at selling," Henley said via e-mail. "In addition, Lawson has proven that it can easily integrate between different products that weren't part of the original solution/design."

The fit between the companies would not be precise, however. Infor has moved to align its software with Microsoft's technology stack, while Lawson has a long-standing relationship with IBM.

This shouldn't be a big deal, in Henley's view. For one, Lawson also uses some technologies from Microsoft and SAP, for user interfaces and BI (business intelligence), respectively, he said. "And as ERP becomes more about the cloud, the technology becomes irrelevant anyway, and what's important is speed to implementation," he said.

But for all Infor may gain, customers might suffer under its ownership, according to another observer. "I have to say it wouldn't be great for Lawson customers," said Forrester Research analyst Paul Hamerman. "Customers are used to dealing with Lawson and they know what to expect. Infor's track record in acquired products is not that stellar."

The IDG News Service is a Network World affiliate.