Lawson Joins ERP Shake-Up - InformationWeek

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Software // Enterprise Applications

Lawson Joins ERP Shake-Up

Lawson Software Inc.'s buyout of Sweden's Intentia International AB last week creates the world's largest enterprise-resource-planning vendor dedicated to midsize companies. The all-stock deal worth $480 million, which is expected to close by the end of the year, follows Oracle's acquisition of PeopleSoft Inc. and Retek Inc. earlier this year, which made Oracle the No. 2 business apps vendor after SAP.

The new company, operating as Lawson Software, is expected to have nearly $1 billion in annual revenue, 3,500 employees, and more than 4,000 customers in 40 countries. Lawson ranked sixth in revenue among midmarket ERP vendors, according to Forrester Research. Lawson and Intentia's combined fiscal 2004 revenue of $770 million puts it in contention for the top spot in Forrester's ranking, which is held by Microsoft Business Solutions with $667 million in '04 revenue.

Demand for ERP among midmarket companies is growing globally and remains underserved, said Richard Lawson, the new company's co-chairman, in a conference call. "The big ERP players aren't doing it, and the small ERP players can't do it," he said.

Consolidation reduces options, but it creates vendors with more extensive offerings and global reach, Forrester says. Lawson offers financial, human-resources, procurement, and retail applications, and its customers are mostly U.S. health-care, retail, government, education, and financial-services companies. Intentia sells services, manufacturing, distribution, and maintenance apps to apparel, food and beverage, wholesale, and manufacturing businesses in Europe and Asia-Pacific.

The price is right but the challenges are many, says Bruce Richardson, chief research officer at AMR Research, in an E-mail. "Lawson is getting a company with a strong installed base--more than 3,000--for $480 million," he says. "It will be a challenge to integrate a struggling Swedish company selling to manufacturers and distributors with a low-profile U.S. company selling mostly to service industries."

The deal was accompanied by a management shake-up. Lawson CEO and president Jay Coughlan stepped down. Harry Debes, president and CEO of SPL WorldGroup Inc., a software vendor to the electrical industry, takes over those positions on June 15.

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