The Supply Chain Matters blog highlights for readers that indeed, and contrary to other indications, supply chain planning applications provider Blue Yonder will be acquired by Panasonic for a reported $7.1 billion.
This news has been initially reported by Reuters and is now supported by a press release from Panasonic. Panasonic previously invested in a 20 percent stake in Blue Yonder in July of last year, thus the initial news of a potential full acquisition did not seem all that surprising. With today’s news, there is evidence that the original deal may not have been to the appeal of Blue Yonder’s existing investors and executive management team.
If upon reading this blog update you might be confused, do not, since this is the third iteration of this particular news cycle.
On March 9, Supply Chain Matters highlighted a published report from Nikkei Asia, citing multiple sources familiar with the matter, indicating that Panasonic was set to Blue Yonder (previously known as JDA Software) for a reported sum of upwards of $6.5 billion. On April 12, Blue Yonder announced that it had confidentially filed documentation with the U.S. Securities and Exchange Commission (SEC) for a proposed initial public offering (IPO) of stock ownership. The technology provider indicated in its release that the exact number of shares and the price range for the potential offering had yet to be determined.
According to today’s Panasonic announcement, the Japan based manufacturing and services company will purchase the remaining 80 percent of Blue Yonder shares for $5.6 billion, and with the repayment of outstanding debt, the investment totals $7.1 billion. The transaction values Blue Yonder at an astounding $8.5 billion. The deal calls for Panasonic to provide $3.5 billion in cash with the remainder financed by a hybrid capital financing arrangement.
The release notes that the final agreement was reached between Panasonic and the existing shareholders of Blue Yonder, that being private equity investors New Mountain Capital and Blackstone.
Supply Chain Matters readers should especially focus on the difference between the outstanding shares and debt numbers, a likely indicator of the debt burden imposed on Blue Yonder.
Panasonic indicates that for the year ended December 31, 2020, Blue Yonder’s total company revenue exceeded $1 billion, 67 percent of which was recurring revenue. SaaS annual recurring revenue was noted as $343 million and SaaS net revenue retention rate were noted as 120 percent. The company reportedly counts more than 3,000 global customers including 65 of the top 100 retailers, 48 of top manufacturers, and 9 of the top 10 third-party logistics providers.
Regarding Panasonic’s goals in this acquisition, the press release notes:
“Combining Panasonic’s strength in industrial engineering, IoT and edge technologies with Blue Yonder’s AI/ML-driven supply chain and commerce solutions greatly intensifies the customer value of Blue Yonder’s leading digital fulfillment platform. Together, Panasonic and Blue Yonder will deliver a unique competitive advantage for customers to drive more automation and actionable, real-time business insights that reduce waste and improve operations, while creating a more sustainable world.”
Panasonic further indicates that the Blue Yonder brand will be retained and that existing CEO Girish Rischi and the extended leadership team will be part of a Panasonic’s Connected Solutions Company umbrella.
In April 2022 Panasonic’s corporate structure ill shift to a holding company concentrating management resources on strategic businesses. One of these business areas is termed Gemba Process Innovation, with ‘gemba’ having the meaning of frontline operations, the place where value is created. This is reportedly where supply chain innovation and automation will reside. Leading this new group will be Yasuyuki Higuchi, the CEO of Panasonic Connected Solutions Company.
Implications for Existing Blue Yonder Customers
Once again, we advise Blue Yonder and/or former JDA installed base customers to maintain a keen eye on ongoing developments. Now that a deal has indeed been consummated enriching Blue Yonder’s private equity investors, the focus will now shift to the planned transition plan under the umbrella of Panasonic.
While it appears that Blue Yonder will remain a brand with its existing management team, the watch word is that of what Panasonic views as connected solutions, as this new consummated entity evolves.
This supply chain analyst’s initial viewpoint is that it will take some time for all of this to sort out. Besides being the largest acquisition that Panasonic has ever undertaken, there will need to be internal alignment as to any Blue Yonder new product development of existing applications strategies going forward.
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