Software Giants Likely to Circle Lawson

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Don’t expect Microsoft or IBM to show up at the auction for Lawson Software Inc.

IBM has a 40-plus year partnership with SAP AG, which like Lawson specializes in back-office software services, including enterprise resource planning, or ERP.

“I don’t think they would want to jeopardize their relationship with SAP by bidding on a competitor,” Longbow Research analyst Steve Koenig told Mergers & Acquisitions.

As for Microsoft, the Redmond, Wash.-based software giant already has “three ERP product lines through acquisitions,” Koenig said. “I'm not sure it's a priority to take another stab at ERP.”

Microsoft’s business solutions segment entered the ERP market by acquiring Great Plains Software in 2001 and Navision in 2002.

However, Koenig noted that Waldorf, Germany-based SAP is a potential buyer for Lawson, which was pushed onto the auction block last week when Golden Gate Capital and privately held software firm Infor offered to purchase all of the company’s outstanding stock for $11.25 per share in cash.

The Infor Golden Gate bid values the St. Paul, Minn.-based target at $1.8 billion. Lawson hired Barclays Capital to assist the sale process.

“There’s room for Lawson to go higher,” Koenig said, believing that a $13 to $15 per share bid from a strategic acquirer such as Hewlett-Packard Corp. or Oracle Corp. is likely.

Any bid over $15 per share is overly generous, Koenig says.

A bidding fight between Infor and Oracle could make for tabloid fodder, as Infor's recently appointed CEO Charles Phillips left Oracle in October to join the Golden Gate-backed firm. Adding further intrigue to the coterie of possible buyers is the fact that former HP chief executive Mark Hurd replaced Phillips at Oracle.

However, Infor may not have enough cash to woo Lawson, Koenig said. On its side, though, is Golden Gate. The San Francisco-based firm has been an active acquirer in the software space. It acquired Sierra Systems Group Inc. in October 2006 for $93.2 million, or $9.25 per share. Calls to Golden Gate, Lawson and Barclays were not returned.

Lawson traded at $12.25 on Monday afternoon, March 14, and was up 6%. It's traded on the Nasdaq with the ticker LWSN and has a market cap of about $2 billion.

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