Credit situation stalls JDA's acquisition of i2

Global - The acquisition that has been touted to shake up the supply chain software market has been put on ice a day before the acquisition was supposed to take place.

In a statement, JDA said it notified i2 Technologies that because of the current credit crunch, "available credit terms would result in unacceptable risks and costs to the combined company".

As a result, JDA requested that i2 adjourn its shareholder meeting scheduled for 6 November to allow the two companies to negotiate a reduced purchase price to close the merger. The companies expected to close the deal on 6 November 2008 after the i2 shareholders vote on the same day.

"We continue to believe in the strategic benefits that a merger with i2 would provide," said JDA CEO Hamish Brewer. "We are disappointed that the current financial credit market and economic environment is impacting our plans to close this acquisition this week."

Upon receipt of JDA's request, i2 met with advisors and the i2 board of directors during which time the decision was made to go ahead with the shareholder meeting. In a statement, i2 said "based on a number of factors, including that JDA's obligation to complete the merger is not subject to any financing contingency, [i2] does not believe in adjourning the special meeting is in the best interests of i2's stockholders".

During the meeting, i2 shareholders voted in favour of the acquisition, saying "The number of shares voted in favor of the merger represented more than 80 percent of the total shares outstanding and entitled to vote at the meeting. More than 99 percent of the shares voted at the special meeting were cast in favor of the merger."

JDA said that in the event i2 goes ahead with its planned shareholder meeting, JDA will exercise its discretionary right under the Agreement and Plan of Merger to take up to 60 days in order to continue to attempt to arrange acceptable debt financing.

"We are committed to completing the merger transaction at US$14.86 per share of common stock with JDA," said Jack Wilson, executive chairman of the i2 board of directors. The company added that there could be no assurance that the parties will be able to close the merger transaction drawn up by the existing merger agreement, even if the merger agreement is approved by i2's stockholders.

The companies previously valued the acquisition at US$346 million in cash.