JDA and i2 said they are calling off their supply chain wedding plans amid an uncertain economic picture.
In August (statement), JDA agreed to buy i2 for $346 million, or $14.86 a share, in cash. On Wednesday, i2 shares closed at $7.70. JDA was going to finance the deal with debt to avoid dilution to shareholders. Naturally, JDA wanted to renegotiate because the economy unraveled since the deal was announced.
According to a statement, i2 gets a $20 million breakup fee as a consolation prize. The two parties didn't reveal details of their most recent discussions, but there's an uncertain demand picture and both companies have seen their shares plummet.
Simply put, it makes sense for this deal to be scrapped. Does JDA really want to blow $386 million and assume integration risks in this market?
i2 noted that it has a significant cash balance to weather the storm. As of Sept. 30, i2 had $220 million in cash and equivalents. Here's a look at i2 shares since the deal was announced: