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Manugistics Falls After Nixed Takeover Rumor

The company said it will reorganize and cut about 400 employees.

Supply-chain software maker

Manugistics

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disappointed investors after it announced plans that it was restructuring its business Tuesday. Last week, investors pushed the stock higher in anticipation that German enterprise software developer

SAP

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was close to buying Manugistics.

Shares of Manugistics were down around 30% today after the company said it will reorganize as an independent software vendor and cut about 400 employees. It also said it is not in discussions with other companies regarding a merger.

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Christopher Desautelle, analyst with

Legg Mason Wood Walker

, said that if he had to speculate, Manugistics and SAP could not agree on a price, perhaps because the premium Manugistics sought may have been "too rich." Rumors last

week suggested Manugistics had turned down an offer of $15 per share and that SAP may have had a new offer.

"It looks like they couldn't get a deal done, so they're going to do it alone," said Desautelle, who downgraded Manugistics to market perform from outperform after the announcements.

The restructuring includes hiring a new chief executive. Both Joseph E. Broderick, executive vice president of client sales and services, and Keith Enstice, senior vice president of global consulting services, have resigned.

"It's a situation where they made a move -- they laid off people, and some management has resigned," said Desautelle. "It's a 'go-for-it' strategy."

Shares of Manugistics had rallied to 17 3/8 last week as the takeover talk heated up. It was recently trading 4 11/16 lower at 10 3/4.