E2open CEO Details Value Added in BluJay Solutions Acquistion
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E2open CEO Michael Farlekas said his company’s supply chain solutions platform will be enhanced with more capabilities such as logistics execution software via its acquisition of BluJay Solutions.
The planned $1.7 billion transaction, announced May 27, is intended to provide increased value for customers as well as unlock more opportunities to accelerate long-term growth. Austin, Texas-based E2open will combine its end-to-end platform and trading partner network with the transportation management software and global trade capabilities provided by BluJay.
“We have a very small TMS today,” Farlekas said in an interview with Transport Topics on June 2. “So it just dramatically increases our capability in terms of transportation management. And the other thing it brings is a network.”
Farlekas
E2open is a network-based provider of a cloud-based and end-to-end supply chain management platform. BluJay Solutions is a cloud-based logistics execution platform that provides solutions for shippers, logistics service providers and freight forwarders. That includes a suite of logistics execution applications and a trade network of more than 50,000 participants serving over 5,700 global customers.
“We are very excited about joining forces with E2open in this highly strategic combination,” BluJay CEO Andrew Kirkwood said in a statement May 27. “Together, we will deliver a more powerful supply chain software platform built upon the world’s largest global trade network.”
When acquiring a business, Farlekas noted that his company does so for one main reason: It will provide a better service for customers as one operating platform. The potential acquisition must be mission-critical, meaning customers rely on their solutions. They have to have adjacency, meaning the solutions the company provides could be integrated. They also have to have complementary capabilities.
“We see a large convergence happening between our core business, which is planning and collaboration from end-to-end and also the logistics, or execution, part of the supply chain,” Farlekas said. “The TMS is right in the middle because if you put yourself squarely in a brand owner’s perspective or manufacturer’s perspective, they have transportation in all phases of that process.”
Kirkwood
BluJay will be fully dissolved into the company and its services integrated into the larger operating platform. Its employees and leadership are coming over as well. Some BluJay executives will even be getting positions on the company board. BluJay shareholders will hold approximately 22% pro forma ownership of E2open after the consummation of the transaction.
“We integrate companies,” Farlekas said. “We don’t make them stand alone. We don’t operate them independently. Our entire value proposition is around combining applications from the end-to-end supply chain into one cohesive process. So we’ll have one go-to-market for the entire company.
“We’ll have one way of operating for the entire company. We’ll have one brand for the entire company. We’ll have one solution platform that natively works together.”
This acquisition enhances E2open's #supplychain execution capabilities with BluJay's leading #transportationmanagement software and #globaltrade capabilities.
Read press release --> https://t.co/OpeIz4TrNV#ETWO #globaltrademanagement #customsfiling @myblujay pic.twitter.com/87YOUJAkTD — E2open (@E2open) May 27, 2021
E2open will acquire BluJay Solutions for an aggregate of 72.4 million shares of Class A common stock and $760 million cash pursuant to the purchase agreement. This includes repayment of debts and is subject to adjustments for certain items. E2open said that based on the price of its common stock as of May 25, the stock-and cash-transaction is valued at $1.7 billion. The final transaction value will change based on fluctuations in stock prices and adjustments.
“We think it’s a fair price and a fair price for the business. We also understand the uniqueness of this company and all the things that it brings to the table,” Farlekas said. “So for us, we feel like we have a fair price and the owners are rolling a very large percentage of their equity stake into our company. And they’ll also have a board seat. So I think of this as them not only valuing BluJay, but them also valuing E2open.”
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E2open said the acquisition will materially expand its supply chain execution capabilities while adding key direct-to-consumer offerings including last mile, parcel and drop-ship commerce. The company also said it will help expand its global reach as well as enhance its supply chain networks to include over-the-road trucking and complementary air transportation. It also broadens analytics offerings.
“BluJay is a transformative acquisition for E2open: It is strategic, it is financially compelling, and it further accelerates organic growth for the combined company,” E2open board Chairman Chinh Chu said in a statement. “It is a rare opportunity to combine two cloud-based, supply chain management software platforms with complementary networks.”
Credit Suisse has been serving as the lead financial adviser to E2open. Goldman Sachs is serving as an exclusive financial adviser to BluJay. Both financial services companies have provided committed debt financing in support of the transaction.
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