With the acquisition, Dallas-based i2 intends to provide customers with a more complete product suite, combining RightWorks' procurement software with i2's flagship supply chain management software, the companies said late Thursday.
i2's core software helps automate and manage a company's inventory and product-demand cycles while RightWorks develops procurement software, which links companies with their partners and suppliers over the Web to buy and sell goods and materials.
The move to buy privately held RightWorks comes as the business-to-business market is heating up as a number of players, including i2 rivals Ariba, Commerce One, SAP and Oracle, aggressively expand their product lines to cover the scope of a company's supply chain and purchasing needs.
Ariba, for one, has been actively branching out from its original specialty of providing procurement software into supply chain automation, which has been i2's strong suit. The recent attempts by both companies to expand into each other's territories have led to growing skepticism about the state of their high-profile business-to-business alliance with IBM. The trio was created to sell software and services to help jointly build online marketplaces that serve companies in aerospace, construction, retail, chemical and other industries.
Through the RightWorks acquisition, i2 said it will expand its product suite designed for companies and their online marketplace initiatives to address other business needs such as handling direct and indirect procurement, order management, collaborative design and customer relationship management.
The companies said they expect to release the first set of their integrated software products in 60 days.
Under terms of the agreement, approximately 5.3 million shares of i2's common stock will be exchanged for all of RightWorks' common stock. The deal is valued at roughly $114 million based on i2's closing price Thursday of $21.44, the two companies said.
RightWorks' 400-some employees will join i2, but will continue to work out of their San Jose, Calif., headquarters, and other offices worldwide. RightWorks, which is led by former Baan Chief Executive Mary Coleman, was funded by the Internet Capital Group and serves a number of big-name clients, including Computer Sciences, Fujitsu and Wells Fargo Bank.
The transaction is slated to close in the second quarter of this year, and i2 said it expects the deal to be accretive to earnings by early 2002.
The deal has won approval by the boards of each company and is still subject to government approval and the official thumbs-up from RightWorks' stockholders, as well as to customer closing conditions.