chinadotcom Nixes e-Lux, Acquires IMI

chinadotcom , through its subsidiary company CDC
Software, on Tuesday announced the acquisition of supply chain management (SCM)
software provider IMI Corp.

chinadotcom took over the company after gaining a 51-percent majority stake; Palo Alto, Calif., Symphony Technology Group holds the other 49 percent.

The acquisition of IMI is a proven moneymaker for chinadotcom, which has had
to fend off inquiries from the investment community recently over its
earnings reports. Officials say they are now on the mend, taking losses of
$11.2 million from last year down to $267,000 in the second quarter of 2003.

IMI provides SCM solutions for a bevy of blue-ribbon clients including GE,
AT&T, Starbucks, Campbell Soup, Dial, Frito Lay, Kellogg’s, and
Warner/Electra/Atlantic. chinadotcom expects to immediately begin rolling
up IMI’s revenues into the chinadotcom balance sheet, starting this month.

Officials said the acquisition provides three key components for the
manufacturing industry – order management, warehousing and logistics

“As China plays an ever increasing role in global manufacturing, especially
since its entry into the (World Trade Organization), we see growing demand
from Chinese companies and multi-national companies operating in China for
SCM solutions, including order management, warehousing and logistics — to
link up factories in China with demand centers around the world. We believe
IMI will allow us to best serve this need,” said Peter Yip, chinadotcom
chief executive officer.

The buyout also compliments another pending acquisition — Ross Systems,
Inc. for $68.9 million — announced Thursday. Ross is
another software provider serving the manufacturing industry. Tied with
IMI, Yip expects to be able to provide a compelling product for China’s
burgeoning manufacturing sector.

“IMI has special strategic value for us since SCM is a critical front-end
requirement to any modern ERP package, and IMI’s SCM solution is a world
leader,” he said. “We feel that it complements our pending acquisition of
Ross Systems, a leading process manufacturing software company, in terms of
geographical presence, complementary product channels, and potential
cross-selling opportunities to both customer bases.”

The IMI buyout comes at the same time the parent company signaled an end to
acquisition talks with short-message service (SMS
) provider e-Lux of Japan. SMS is used
primarily in the mobile phone industry for text messaging.

Earlier this year chinadotcom purchased Newpalm, another SMS provider, and
while the company was looking for a provider to cover the southern provinces
of China, e-Lux was likely hesitant to agree to the terms of the deal.

Instead of a stock or cash buyout, chinadotcom wanted to pay e-Lux 20-40
percent in advance and make future payments dependent on how well the
company performs going forward, what officials called a “earn-out” or
“clawback.”

It’s likely the two companies will instead focus on working together as two
entities, instead of one.

“We believe this mutual decision is in the best interests of both companies
and we look forward to potential future business co-operation with e-Lux by
leveraging its product strengths in the SMS market sector to bolster our
nationwide SMS distribution platform across 26 provinces,” said Daniel
Widdicombe, chinadotcom chief financial officer, in a statement Tuesday.

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