Buying Sprees Continue

Dell Inc. is acquiring the financing arms that it ran in partnership with CIT Group in Canada, as well as CIT's operations in Europe. Meanwhile, Lawson Software, Inc. has agreed to be acquired by a Golden Gate Capital and Infor affiliate for $2 billion, and BMC Software, Inc. has purchased Coradiant Inc. for an undisclosed amount. Finally, CenturyLink, Inc., the nation's third-largest telecommunications carrier, announced plans to buy Savvis, Inc. for $2.5 billion.

Focal Points:

• Dell announced that it will purchase the remaining portion of the Canadian financing partnership it has with CIT Vendor Finance. The vendor is also buying the Dell-related assets and sales and service functions of CIT's operations in Europe. Dell and CIT have jointly financed deals in the U.S. through Dell Financial Services, and have worked together on financing deals in 25 countries for the past 14 years. According to a Dell spokesperson, as part of the original agreement between the two companies, Dell was eventually supposed to own the financing arms. The acquisition will allow for financing terms and conditions to be directly integrated into Dell's sales deals, said Dell. The vendor anticipates the acquisition of CIT's stake in the Canadian financing partnership will be done around the middle of this year. The European asset acquisition will take longer, however. Dell expects it to close at the end of 2011 or in early 2012.
• Lawson has agreed to be acquired by GGC Software Holdings, Inc., an affiliate of Golden Gate Capital and Infor, in an unsolicited takeover bid worth approximately $2 billion. No other suitor emerged, according to people familiar with the matter. Under the terms of the agreement, Lawson shareholders will receive $11.25 per share in cash, a 14-percent premium to the March 7 close, which was the last trading day before reports of a potential deal. According to Info's CEO, Charles Phillips, who joined the company from Oracle Corp. where he served as co-president, Infor is now the third-largest business applications provider behind SAP AG and Oracle. The companies expect the deal to close in the third quarter of this year. Separately, BMC announced the purchase of Coradiant, a provider of Web application performance monitoring solutions. Per BMC, this acquisition enhances BMC's ability to offer its customers a 360-degree view of service performance. The new BMC End User Experience Management solution will be based on Coradiant's technology, and will provide a real-time view into actual application performance and user behavior, said BMC. Coradiant also brings valuable partnerships, such as the one with Akamai Technologies, Inc., BMC added.
• CenturyLink announced plans to buy Savvis for approximately $2.5 billion, a 53 percent- premium over the market cap for the company from earlier this year. Under the terms of the agreement, CenturyLink is offering $30 in cash plus another $10 in CenturyLink stock for each Savvis share. CenturyLink is also assuming approximately $700 million in Savvis debts, according to the announcement. Savvis will be run as an independent subsidiary and will continue to be based in St Louis, Missouri, officials stated. Moreover, CenturyLink expects that most of the company's 2,450 employees will be retained. The CEO added that the Qwest data center operations, which CenturyLink acquired last year, would move over to Savvis and would be put under control of Jim Ousley, currently Savvis chairman and CEO. The two companies believe that there are about $70 million in cost reductions they can make once the acquisition is completed, a process that will take more than three months.

Experton Group believes Dell is better positioned to compete on price (one of its core principles) now that it has sole control of the financing arm. In that Dell sees the enterprise and small and mid-sized business (SMB) markets as key growth areas, this acquisition will enable the vendor to more aggressively pursue bids and attempt to gain market share from its key competitors. The acquisition of Lawson by Charles Phillips' company should be viewed as a piece of the puzzle that he is filling out in order to replicate what he did at Oracle. IT executives can expect him to grow the company organically and through added mergers so that it can take Oracle on head-on. The assets are not well poised to challenge Oracle in the large enterprise space but can certainly impact Oracle's expansion in the SMB arena. CenturyLink has rapidly grown into a global Telecom carrier and managed hosting and colocation provider. CenturyLink most likely wants to use its assets as a jumping point into the cloud market as well. However, the service offerings lack many of the features one expects to get from a cloud provider and the roadmap for addressing the shortcomings is not clear. IT executives should view all these deals positively and, where appropriate, consider them for their short-list of providers as aggressive low-cost suppliers.