In somewhat surprising news, supply chain software vendor E2open has made a public offer to acquire Global Trade Management vendor Amber Road in a deal that would be valued at $300 million.
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This move is the latest in a series of acquisitions under CEO Michael Farlekas, who took on that role in 2015. But unlike some software companies employing "roll up" strategies – acquiring smaller supply chain software companies just to get additional customers and revenue and take out a lot of the costs from the acquired firms - E2open's moves have been more strategic, providing complementary capabilities to its existing solution suite and strategy - and that is the case here.
E2open proposes acquire all outstanding shares of Amber Road that it does not already own for $10.50 per share in cash. This proposal represents a 52% premium to Amber Road's closing stock price on February 9, 2018, the last trading day prior to this release, a 41% premium to Amber Road's 30-day average trading price, and a 33% premium to Amber Road's 2-year average trading price.
E2open says it had made private offers to acquire Amber Road and was presumably rebuffed, leading to this public announcement in a move to court Amber shareholders directly.
"This transaction combines Amber Road's Global Trade Management capabilities with E2open's end-to-end Supply Chain Operating Platform,: said Farlekas. "The joining of E2open's manufacturing and distribution network with Amber Road's global trade network creates a unique and unparalleled offering in the market allowing customers to operate their end-to-end supply chain from one place in the cloud. E2open and Amber Road both serve Fortune 100 clients, whose complex, global supply chains will benefit from this combination."
Over the past few years, as a result of acquisitions, E2open has somewhat quietly become one of the largest "best of breed" (meaning not an ERP) supply chain software companies in the market.
E2open has its roots in the old TradeMatrix solution set initially developed by i2 Technologies in the late 1990s, before operational, financial and at the time market challenges led i2 to abandon the solutions, which in effect involved creating a series of electronic marketplaces for different industry sectors.
Most of these marketplaces simply went away, but the one for the high tech industry, always by far i2's strongest sector, made it as an independent company, providing multi-level visibility to upstream suppliers to manage commitments, manufacturing plans and more.
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After Farlekas' entry, E2Open acquired "demand sensing" and inventory optimization vendor Terra Technology, which boasts customers such as Procter & Gamble and Unilever, and then Orchestro,  which provides a "demand signal repository" across retailers so manufacturers can better see actual demand. Both solutions target consumer goods companies.
In late 2017, E2open announced its acquisition of a company called Zyme, which provides largely technology firms with information on inventories and more from integration of downstream channel partners.
Then in January, the company announced the acquisition of software firms Birch Worldwide and Entomo.
SCDigest editor Dan Gilmore says this deal does make a lot of sense for E2open.
"With its existing visibility platform, E2open is closely connected to global trade management already, and certainly shares many customers with Amber Road already," said Gilmore. "Global trade "content" - all the rules and regulations - is difficult and expensive to develop and maintain, and Amber Road is really the leader in this space."
E2open said the acquisition would extend its current platform that digitizes end-to-end supply chain operations to include the important considerations of tariffs, regulations and total landed cost across the entire supply chain.
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