PeopleSoft`s $1.7 billion acquisition of JD Edwards has piqued the interest of industry observers in SA, where the relationship between JD Edwards and the local PeopleSoft distributor is far from amicable.
The deal, set to create the world`s second largest enterprise applications software company, surprised local PeopleSoft distributor Activ8, part of ERP.com Holdings, which had no prior knowledge of the transaction.
Activ8 MD Paul Mather says the first time the company became aware of the deal was when a press release was issued yesterday.
"Neither we, nor the people we report to in the UK, had prior knowledge."
He says he does not yet know what the implications of the deal will be locally. However, he believes that from a contractual point of view the deal will be finalised only towards the end of the year.
ERP.com CEO Peter Forsyth says there will be no short-term impact in SA. "We have been in discussions with PeopleSoft, but I can`t say what the outcome will be."
An industry insider says the situation makes for interesting politics, since "the two MDs - of JD Edwards and ERP.com - are not the best of friends".
ERP.com and JD Edwards` partnership came to a bitter end at the start of last year after a dispute over partnership fees.
ERP.com continued to offer services around JD Edwards software although the latter refused to recommend it to its clients.
The industry insider says what usually happens in a deal like this is that the owner of the acquirer takes over the business of the company being acquired.
However, SA is unique in that the company being acquired here is much larger than the acquirer. JD Edwards has a large office while PeopleSoft is represented only by a small local distributor.
However, he says one of ERP.com`s strengths is that it knows the PeopleSoft product while JD Edwards does not.
JD Edwards country manager Mike Evans says there are about 60 people employed by his company locally.
"I can`t say how the merger itself will be carried out or how we will deal with the local distributors at the moment," he says. "That still has to be clarified."
However, he says the merger will give the company access to a product set and installed base of customers, opening up a market that was closed to it until now.
"It will align PeopleSoft with a credible player in the South African market that has a track record of delivery and it will give us an opportunity to give PeopleSoft customers the JD Edwards service."
On a global basis, the new combined entity will have about $2.8 billion in annual revenue, 13 000 employees and more than 11 000 customers in 150 countries. The deal will also allow PeopleSoft to expand its presence in more than 20 industries.
The deal is expected to close in the late third or early fourth calendar quarter.
Joint statement
In a joint statement, Peter Forsyth and Mike Evans said: "We are both fully committed to and supportive of the planned merger between JD Edwards and PeopleSoft and believe that this will have significant benefits for the customers of both organisations."
"We are forbidden under SEC regulations to work together until approval for this transaction has been granted. We are however committed to doing so once the restricted period has passed to ensure that the process is as smooth as possible for both PeopleSoft and JD Edwards customers in South Africa."
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