JDA Software to Buy Manugistics

JDA Software (JDAS Quote - Cramer on JDAS - Stock Picks) has agreed to acquire supply-chain software maker Manugistics (MANU Quote - Cramer on MANU - Stock Picks) in a deal that values the company at $211 million.

Under the terms of the transaction, JDA will pay $2.50 for each Manugistics share. JDA said the acquisition will enhance its ability to provide software and services to manufacturers, wholesalers, distributors and retailers.

Shares of Manugistics have traded between $1.47 and $2.53 in the last year. The stock closed Monday at $2.35 in regular trading but rose 4.7% to $2.47 after hours. JDA sank $1.59, or 10.6%, from its 4 p.m. EDT close to $13.41 in extended trading.

Were the two combined last year, they would have had revenue of more than $390 million. As part of the transaction, Thoma Cressey Equity Partners plans to invest $50 million in JDA by purchasing convertible preferred stock.

JDA said the merger with Manugistics should yield annual savings of $25 million to $30 million within the first 12 months after the deal closes. JDA, which sells software to various retailers and manufacturers, said it will finance the acquisition by taking on a "moderate amount" of debt.

The companies expect to complete the transaction in the second or third quarter.

Separately, JDA reported first-quarter total revenue of $47.9 million, down from $50.3 million in the same period a year ago. Software revenue fell to $7.1 million from $10.2 million last year.

The company earned $487,000, or 2 cents a share, compared with $703,000 and 2 cents a share in the year-ago first quarter. JDA had an adjusted first-quarter profit of 6 cents a share, which excludes certain items.

JDA said the quarter was "a disappointing start to 2006" because a significant number of software deals failed to close on the company's projected time frame. The results missed Wall Street's consensus forecasts. On average, analysts surveyed by Thomson First Call were looking for a profit of 11 cents and revenue of $52.4 million.

"During the first quarter we closed some deals that slipped out of the fourth quarter 2005," the company said. "However, most of those fourth-quarter deals remain open in second quarter and we have added some new deals that slipped during first quarter to our list. We are retaining our annual guidance for software, total revenue and earnings growth in 2006 based on this continued pipeline of deals."