Last Tuesday, Illinois Tool Works (ITW) announced it is buying supply chain management software vendor Click Commerce. Click has been on an acquisition program of its own over the past few years, having built a portfolio of SCM packages, including its acquisitions of Elance (contract management), Optum (warehouse management and supply chain execution), and Xelus (service parts planning).
Now Click itself is being bought by ITW, a $13 billion diversified manufacturing firm. Click's revenue last year was $59 million. The deal is for $292 million, or $22.75 per share, a 27% increase over Click's stock price before the announcement.
Although ITW has grown through acquisition itself, it has no experience in software development. That doesn't have to be a problem, provided that ITW lets Click operate largely as an independent business unit. Click was making some smart moves prior to this announcement. If ITW is smart, it will manage Click with a light hand.
The deal calls to mind another software vendor that was acquired by a large diversified manufacturing outfit: Baan, which was acquired by Invensys for $708 million in 2000, only to throw in the towel three years later and sell Baan (along with most of its other software acquisitions) to SSA Global for $135 million.
Hopefully ITW will do better with Click than Invensys did with Baan.
Here is the obligatory press release regarding ITW's acquisition of Click
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