Apax Partners to acquire Epicor and Activant

Private equity form Apax Partners has reached agreement to acquire Epicor. Per the announcement:

Apax will commence a tender offer to acquire all of the outstanding common stock of Epicor for $12.50 per share in cash, followed by a merger to acquire all remaining outstanding Epicor shares at the same price paid in the tender offer. The offer price represents a premium of 11.2% over Friday's closing stock price, an 18.9% premium over the average closing price for the previous 30 calendar days and a 34.4% premium over the average closing price for the previous 52-week period. The transaction is valued at approximately $976 million.

This move has been on the cards for some time. Elliott Associates, a 13.5% stakeholder in Epicor said in a separate announcement:

[ Jesse A. Cohn, Portfolio Manager at Elliott said: ] "Over the last three years, Elliott has had a close dialogue and working relationship with Epicor's management, and we are pleased to have helped the company realize this outstanding outcome for all shareholders. We applaud the Board for achieving this terrific combination."

As part of the announcement, Apax is also acquiring Activant Solutions, a privately held company. Again, according to the blurbs:

"Both Epicor and Activant's customers will benefit from the combined entity's increased scale, solutions portfolio and expanded service offerings," [Jason] Wright [Apax partner] said. "Epicor will have access to additional domain expertise, particularly in wholesale distribution and automotive, hardlines, lumber and specialty retailing, while Activant will benefit from an accelerated roadmap to international operations, softlines retail functionality, and additional supply chain and manufacturing capabilities."

Combined revenues for the enlarged company are expected to be $825 million. Epicor's total revenue for financial year 2010 were $440 million. Activant reported revenue of $378 million in 2009.

Industry watchers will want answers to many questions:

1. Does this signal CEO George Klaus's final retirement? He was brought back in 2009 to get Epicor back on track after a turbulent period.
2. How will this impact Epicor's latest two-tier strategy?
3. What will happen to Epicor Express? We've not heard much about this lately.
4. Will the solutions be sold as separate offerings or will the new management look for integration opportunities where it makes sense?
5. How will Activant be localised for international operations and will it be upscaled for larger organisations?
6. To what extent will management continue investments in Epicor 9 as it continues to ramp?

We will need to wait for the answers to those and many other questions.