"We have always known that our industry was being under-served by too many small software companies that were too poorly capitalized and as a consequence they invested too little money on strategic development and customer service resources. IDS has always tried to achieve critical mass in this industry for the benefit of our customers. The affiliation with Retalix allows us to bring more resources and more investment to the table for the benefit of our customers," Michaud, a member of the ID Editorial Advisory Board, said in a statement to ID Access.
Commenting on the acquisition, Barry Shaked, ceo of Retalix, said, "A major part of Retalix's growth strategy has been to expand our offering of enterprise and supply chain management solutions, and our addressable markets. IDS's suite of enterprise solutions for distributors serving the food retail sector is a natural extension of our suite of synchronized solutions, which span the food retail enterprise from warehouse to checkout."
Noting the "significant synergies" of combining the IDS solutions with Retalix supply chain management applications, Shaked further said: "We believe this combination positions Retalix to become the leading supply chain solution provider for the grocery, convenience store and food service industries. In addition, the acquisition of IDS will allow us to offer a fully integrated ERP solution to our existing customer base, in particular small and medium sized food retailers who are currently underserved by larger enterprise software providers. I am confident that this acquisition will strengthen our position as the fastest growing provider of enterprise-wide software solutions to the global food retail industry."
Victor Hamilton, chairman and ceo of IDS, observed that the transaction is a "great opportunity" for IDS and its customers. "Combining with Retalix's leading retail solutions, which are widely deployed in the food and convenience store retail industries, will enable us to establish leadership across the entire value chain of food retailing and distribution. By joining with Retalix, IDS will be able to realize significantly greater opportunities as part of a broader integrated offering addressing the full spectrum of the food retail industry," Hamilton said.
Michaud, who is coo of the new organization, told ID Access that Retalix employs more than 1,000 people and has a "substantial commitment to new technology."
"We believe that this combination between IDS and Retalix positions us to help our customers synchronize their respective supply chains with suppliers and customers like never before," he said.
He also emphasized that "foodservice distributions need to understand that we have a long-term commitment to the Power Enterprise software portfolio. It will continue to be the platform that we lead with in the marketplace and we will continue to make substantial investments in these products."
Michaud also said there will be no disruption in current IDS implementation projects. He added that full product support will also continue for all IDS "power" products, H&S, Data Tech, and DEBS customers, "although we are actively encouraging users of our older software brands to continue migrating to our latest release of Power Enterprise."
"We are continuing to hire new employees to keep pace with our growth. All five IDS offices will remain open and now they will be complemented by several additional office locations. In addition, all members of the IDS leadership team plan on remaining with Retalix in a newly formed "Supply Chain Solutions Group," a division of Retalix," Michaud said.
Total consideration for the acquisition is $44.4 million, consisting of $37.4 million in cash and $7 million in Retalix shares. Retalix, which is traded on NASDAQ, has also agreed to pay up to an additional $5 million in Retalix shares contingent upon IDS meeting certain performance criteria over the next two years. In 2004, IDS had revenues of $27.4 million (excluding resale of third party hardware) and was considered profitable. Retalix expects the transaction to be accretive to earnings in 2005.
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