i2 nabs Smart Technologies

Supply chain automation software firm i2 Technologies plans to acquire Smart Technologies, a maker of Web-based customer management software, in a $68 million deal, the company said.

Under terms of the agreement, i2 will acquire all of Smart Technologies' outstanding stock and options in exchange for about 2.1 million shares of i2 Technology's common stock.

The shares would be worth $68 million, based on Irving, Texas-based i2's closing price on Tuesday. The deal is expected to be accounted for as a pooling of interests. I2 makes software that allows companies to manage the flow of materials, cut inventory levels, and better plan use of their inventory.

Austin, Texas-based Smart's applications help companies build Web content to extend relationships with their customers and channel partners. After the acquisition, i2 plans to merge its Austin office with Smart Technologies' headquarters. The combined offices will function as i2's e-business arm, led by Bryan Plug, Smart's chief executive, an i2 spokeswoman said.

The acquisition will help i2 expand its industry-wide footprint, said Dennis Byron, analyst at International Data Corporation (IDC) in Framingham, Massachusetts. I2's main business comes from discrete manufacturers, particularly high tech and electronics firms, and to some extent, apparel and automotive customers.

"This [acquisition] gets them into the purchasing department and, in part, into the trading community," Byron said. "Their basic product is a planning product used by people who run factories. With this acquisition they are expanding their touch point. It's a great strategy so they don't get marginalized."

I2 executives said the company expects the investment to dilute the firm's quarterly results until the end of the year, with positive results expected after.

I2, with $362 million in 1998 revenues, competes in its market with firms including Manugistics and Numetrix, as well as enterprise resource planning giants such as SAP, which released its advanced planning and optimization product last year.