Multinational enterprise software company, Infor is set to be bought by Koch Industries. Infor announced that an affiliate of Koch Equity Development LLC, the investment and acquisition subsidiary of Koch Industries, Inc., has entered into a definitive agreement to acquire the remaining equity stake in Infor held by Golden Gate Capital.
In its Twitter post Infor wrote, “Today we announced @KochIndustries has agreed to acquire all of Infor.”
The financial terms of the deal remain unknown and the transaction is subject to customary conditions and regulatory approval, expected to close in the first half of 2020. However, TechCrunch reported that Infor may have been bought by Koch Industries in a deal pegged at close to $13 Bn.
Infor has been around since 2002, making large-scale cloud ERP software. The company has invested approximately $4 Bn in product design and development to deliver industry-specific CloudSuites that solve the most challenging operational issues for over 68,000 customers around the globe. Now, the acquisition deal with Koch is also being referred to as a strong endorsement of the company's product strategy and focus on creating innovative solutions for their customers by its CEO, Kevin Samuelson.
While announcing the deal, Samuelson said, “As a subsidiary of a $110 Bn+ revenue company that re-invests 90 percent of earnings back into its businesses, we will be in the unique position to drive digital transformation in the markets we serve. We are rapidly expanding our industry-specific CloudSuites and offering customer experiences and outcomes that are well beyond what is standard in enterprise software.”
What makes the deal interesting?
This acquisition deal has taken the space of people and work by storm as a company as significant and as large as Infor has joined hands with another industry leader. Infor, in fact, may be is one of the largest companies, with more than 17,000 employees and 68,000 customers in more than 100 countries worldwide. All of those customers have generated $3 Bn in revenue in 2018.
Interestingly, Koch Industries has been a client for Infor. It has itself rolled out Infor CloudSuite, including in areas such as financial management, procurement, and human capital.
But what might work for Infor through this deal is that Koch is an industrial market business and many of its subsidiary businesses align directly with Infor’s vertical application approach. Further, Koch’s deep pockets can also help Infor in its next phase of growth.
As CEO, Jim Hannan, executive vice president and CEO of enterprises for Koch Industries puts it, “As a global organization spanning multiple industries across 60 countries, Koch has the resources, knowledge and relationships to help Infor continue to expand its transformative capabilities.”
Even Holger Mueller, an analyst at Constellation Research, feels that while it seems like a strange deal on its face, if Koch leaves Infor alone, it might work out. “When you think you have seen it all, something new comes along: A regular enterprise buys a top-five ERP vendor. Now [we’ll have to see] if Koch can ensure Infor keeps building market leading software, using Koch as showcase, or becomes the Koch software affiliate,” said Mueller.
David Dominik, co-founder of Golden Gate Capital also talked about the significant strategic value of the deal between Infor and Koch. He said, “Over the past several years working with Koch Industries and the management team, it is very apparent that there is a great partnership with Koch that will take the company to its next level of success. We are very proud to have worked with the management team in transforming Infor repeatedly over the years as the market has evolved.”
Koch & Infor: Could the new relationship be complicated?
Although Koch and Infor have confirmed that Infor will remain a standalone subsidiary and the existing management team will stay in place, however, how would the decisions be taken going forward could be a concern. In such acquisition deals, the challenge often begins later, when two companies and cultures truly coincide and work together.
How both the companies innovate together and co-create a better future for the enterprise software space is to look forward to.
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