Lawson Software Inc. today said it will acquire Intentia International for $480 million. Lawson says the deal for the company, based in Stockholm, Sweden, is expected to close by Dec. 31; it will create the world's largest enterprise-resource-planning software supplier dedicated to midsize companies.

The deal spurred a big management shake-up. Jay Coughlan, who served as Lawson CEO since February 2001 and president since March 2000, has stepped down. Harry Debes, president and CEO of SPL WorldGroup Inc., a software vendor to the electrical industry, becomes Lawson's new CEO and president on June 15.

The combined companies, to operate under the name Lawson Software, will represent nearly $1 billion in annual revenue, 3,500 employees worldwide, and serve more than 4,000 businesses in 40 countries.

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

Lawson's headquarters will remain in St. Paul, Minn., and international operations will be based in Stockholm.

Lawson's applications support finance, human resources, procurement, and retail, while Intentia's strengths are in services, manufacturing, distribution, and maintenance.

While most of Lawson's U.S. customers are in health care, retail, government, education, and financial services, Intentia has focused in Europe and the Asia-Pacific region on apparel, food and beverage, wholesale, and manufacturing. Applications from the combined companies will run the gamut: ERP, enterprise-performance management, supply chain, enterprise-asset management, and customer-relationship management.

Lawson last month reported it had begun to develop its software products in Landmark, a common architecture it developed that creates Java code, a similar strategy deployed by Intentia in 1997, said Lawson. "We will immediately embark on an integration path so [Intentia] customers can run their manufacturing with our financials and HR," he said. "Over time, we will look at how to re-factor the Intentia applications and migrate to Landmark."

The price is right but the challenges are many, says Bruce Richardson, chief research officer at AMR Research, in an E-mail to InformationWeek. "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. Technology mergers are always tough--this one won't be the exception."

However, Richardson adds that the management teams already have done a lot to cut costs, such as staff downsizing, which should boost the financial health of the combined companies.

This story was updated June 2.