Our Supply Chain Matters blog This Week in Supply Chain Tech column features noteworthy breaking news.
Supply Chain Cloud Platform Technology provider E2open has once again made a significant announcement, indicating today that it has entered into a business combination agreement with CC Neuberger Principal Holdings 1, a publicly traded special purpose acquisition company.
According to the announcement, upon closing of today’s announced transaction, the company’s common stock will be listed on the New York Stock Exchange.
Michael Farlekas, who has served as CEO of this B2B Supply Chain Cloud platform provider since 2015, will reportedly continue to lead the business post-transaction.
The total equity investment raised in this $1.1 billion investment will reportedly be utilized to pay down existing debt, purchase a portion of the equity owned by existing E2open investors and conservatively capitalize the company’s balance sheet.
CC Neuberger Principal Holdings I will domesticate as a Delaware corporation and the name of CC Neuberger Principal Holdings I will be changed to E2open Parent Holdings.
This transaction values the company at $2.57 billion, and subject to customary closing conditions, the parties expect the public traded company to commence by the start of 2021.
Essentially E2open will now full circle transform itself back to a public company after having gone private via an investment transaction with Insight Venture Partners in early 2015.
Since that time, there has been a blizzard of subsequent acquisition announcements and one merger announcement. Various other technology providers involved include:
2016: Demand Sensing technology provider Terra Technology.
2017: Cloud Channel Data Management provider Zyme.
2017: Merger with supply chain planning and demand sensing provider Steelwedge.
2018: Cloud logistics technology provider Cloud Logistics.
2018: B2B Ocean Shipping Scheduling Platform provider INTTRA.
2019: Global Trade Management technology provider Amber Road.
Under the new public company structure, prior principal investors CC Capital, Neuberger Berman, Insight Partners, and Evergreen Coast Capital Corp., will be joined by public investors.
The new company will have a board consisting of nine directors, which according to NYSE listing rules, the majority of which must be independent. The announcement indicates that Ryan Hinkle, a Managing Director of Insight Partners, the company’s current majority investor that will remain a large shareholder post-transaction and will be a board member of the public company. Chinh Chu of CC Capital will also be a board member.
What the Announcement Implies
Rather than a pure IPO, Supply Chain Matters readers can view this announcement as a complex financial transaction that allows the original investors to receive benefit after five years, while additionally providing an added equity investment opportunity in a growing supply chain management platform technology provider.
Supply Chain Matters has featured many commentaries related to E2open over the past eight years. The company’s B2B Cloud network-based technology leverages data and applications to provide customers to ability to enhance end-to-supply network processes in areas ranging from channel shaping, supply network business planning, outsourced manufacturing, logistics and global trade, and other areas.
As we have opined consistently, each of the prior series of acquisitions were a component of an overall strategy orchestrated by then parent Insight Venture Partners to broaden the addressable technology growth areas of the company, along with its customer base of highly visible customers.
Data we reviewed supporting the announcement indicates that E2open is experiencing a 22 percent cumulative annual revenue growth rate and that upsell opportunities remain prevalent.
This Editor has also had the opportunity to speak directly with CEO Farlekas regarding today’s announcement.
Farlekas views this announcement as another stage in the growth trajectory of the company, now being able to provide deeper and multiple pools of capital to make additional moves and investments related to growth. His perspective is that while extended supply chain business processes have always had some form of a connection, software and data that can integrate such processes across a singular, broad platform has been laggard up to this point.
The last few months of growing geo-political trade tensions, significant disruptions and now the ongoing COVID-19 pandemic have obviously provided the added impetus for integrated platform support capability. Farlekas is of the deep belief that now, data and more timely decision making is more important than just applications. There might be some substance to that argument when one considers the broad platform-based business process coverage areas that are now provided.
If one views the current overall business process and data architecture that E2open now supports under a common, unified interface, areas such as:
Product Demand Sensing and Business Planning
Collaborative Manufacturing and Supply Management
Transportation, Logistics and Global Trade Management
And you removed the name E2open, the list would appear as an Enterprise Class Cloud technology provider similar to other well-known names familiar to you, our readers; such as IBM, Microsoft, Oracle, SAP and others.
With this announcement, E2open must now communicate and execute within these same notions of a singular Enterprise Cloud platform of applications and data management support. At the same time, E2open will likely face a lot of aggressive competition in any of these segments.
This is indeed the ultimate transition from “Best of Breed” to Enterprise technology provider, and all that goes with that mantra.
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