FreeMarkets, Adexa Quash Merger
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B2B software maker and auction FreeMarkets Inc. late Tuesday evening decided it is better to be safe than sorry when it killed its merger agreement with e-business solution provider Adexa Inc., citing slouching market conditions and Securities and Exchange Commission delays.
As the agreement was amicable and mutual, Pittsburgh's FreeMarkets will not pay a dime of termination fees to Los Angeles-based Adexa. FreeMarkets said the SEC's hesitation in approving the merger played a role in the companies decision to scrap the deal.
But the firms, which both make products that facilitate the lucrative market of selling and buying on the Web, have embarked on a non-exclusive strategic relationship under which they will cross-sell each other's e-commerce products. Also, FreeMarkets will acquire a 3 percent stake in Adexa for $6 million.
"Both companies felt that under current market conditions, the proposed deal did not make as much sense as originally anticipated," said K. Cyrus Hadavi, president and chief executive officer of Adexa in a public statement. "...We look forward to partnering with FreeMarkets to leverage our technology and to broaden our collaborative commerce solutions for customers."
Though the market has depreciated considerably since February, the deal made sense at the time. According to a report by Forrester Research, purchasing executives plan to buy almost 50 percent of their direct materials online by 2002. And the same percentage of manufacturers expect to use an online marketplace solution to optimize production schedules with suppliers. As for more general market data, AMR Research forecasted that the market for traditional supply chain planning management software will reach $9.5 billion by 2002.
Adexa enjoys a number of high-profile customers, including Advanced Micro Devices Inc., Conexant Systems Inc. and Lucent Technologies Inc, while its new partner FreeMarkets has executed over 11,500 online auctions for more than $16.6 billion worth of goods and services to date.