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News > Deals
i2 in record $9.3 billion deal
March 13, 2000: 9:46 p.m. ET

i2 stock plunges following offer for rival B2B software firm Aspect Development
By Staff Writer Michele Masterson
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NEW YORK (CNNfn) - i2 Technologies Inc. on Monday announced that it would acquire Aspect Development, a competing maker of business-to-business e-commerce software, in a $9.3 billion stock swap, the largest merger in the history of the software industry.
    Under the agreement, Dallas-based i2 will issue 0.55 share of its common stock for each Aspect share, after taking into account Aspect's 2-for-1 stock split that became effective Monday. The exchange ratio represents a 35 percent premium to Aspect's closing stock price on March 10. Aspect shareholders will own about 18 percent of the combined company.
    In response to the announcement, Aspect's (ASDV: Research, Estimates) stock rose 11-13/16, or 14 percent, to 96-13/16, while i2's (ITWO: Research, Estimates) declined 16-13/16 to 191-3/16 on concerns that i2 paid too much for Aspect.
    "The merger strategically makes sense, given the complimentary product lines that Aspect offers, but I question the valuation that's been placed on Aspect -- $9.3 billion for a company that did less than $100 million in sales last year," said Ben Rose, an analyst with Adams, Harkness & Hill.
    The stocks of both i2 and Aspect have been high-flyers over the past several months because of investors' enthusiasm for business-to-business e-commerce companies. Even after today's decline, i2 is about 21 times higher than its 52-week low of 8-7/8, while Aspect is an astounding 31 times higher than its 52-week low of 3-1/8.
    The two companies said that the combined revenue of i2 and Aspect would make the merged company the largest provider of software and content for business-to-business applications. The merged company will have about 4,000 employees.
    In the past, i2 concentrated mainly on developing supply chain management software, allowing companies to track their inventory levels and shipments from their suppliers. Last fall, however, i2 introduced TradeMatrix, a set of programs and communications standards that allow individual companies and industry groups to set up online marketplaces. i2 receives a fractional amount from each transaction in these marketplaces.
    By acquiring Aspect, i2 picks up Aspect's huge product database, which will fit within TradeMatrix. Aspect has a database with information on more than 17 million standard products and supplies commonly used in business. This database is designed to enable companies to quickly find the right materials and supplies at the right price and time. Last month, i2 picked Aspect as a "preferred content provider" for TradeMatrix.
    "i2 and Aspect have been working together very closely for at least six months," said Tom Harwick, an analyst with Giga Information Group."i2 has been re-selling Aspect, and they announced they were working to integrate the Aspect product with the i2 product, so it's an ongoing thing."
    The stock swap has been approved by both companies' boards and is subject to approval by shareholders and regulators. Upon closing, Aspect will become a subsidiary of i2, and Romesh Wadhwani, Aspect's chairman and CEO, will become i2's vice chairman and a director.
    Separately, i2 said Monday that it would acquire San Francisco-based Supplybase Inc., a Web-based provider of customer parts and assemblies, for 1.8 million shares of i2 stock, worth roughly $380 million. Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.