of Geac's and JBA's enterprise applications creates the fourth largest business
applications vendor in the world after SAP, Oracle and Peoplesoft. The new alliance
combines two similarly oriented global businesses that have recently been reorganized
to improve a recent streak or poor performance. The new business combines growth,
earnings consistency, and world-wide coverage, and is well placed to capitalize
on the resumption of growth in the ERP sector that is we predict after year
2000 remediation efforts subside. JBA will become the ERP division of Geac,
and will continue to develop, support and sell its own products. The JBA division
will also include Geac's Streamline product line, an NT-based ERP mid-market
solution. JBA will take over the worldwide management of this business, including
development, sales and support.
We regard the
Geac/JBA acquisition positively. A combined Geac and JBA will have over 30,000
customers to cross sell products to, and will have over 6,000 employees worldwide.
Both companies focus on disparate vertical markets and have very little overlap.
There is also a very good geographic fit. Geac currently derives 65% to 75%
of their revenue from the North American market, while JBA is almost the exact
opposite, with 65% of their revenue derived from Europe and only 25% from the
Americas. If both companies successfully leverage their products into the other's
major market (60% probability within 24 months), the combined company will achieve
significant revenue growth.
Geac has a
positive track record with software company acquisitions. In 1996, Geac purchased
Dunn & Bradstreat Software, and successfully integrated the D & B's products
into its portfolio. As a result, Geac continued to sell and support the SmartStream
and SmartEnterprise product lines. Nevertheless, some growing pains, integration
issues, and discontinuation of redundant products are to be expected, particularly
due to Geac's recent acquisition of Clarus's financial and HR modules.
Until the merger
is consummated, any organization evaluating JBA should exercise moderate caution
and consider existing functionality only. Furthermore, users should monitor
how the new top management will address gaping holes in the combined product
suite particularly the lack of its own customer relationship management (CRM)
and advanced planning and scheduling (APS) software.