Today, Blue Yonder, previously known as JDA Software, announced that Panasonic Corporation will take an equity stake in the technology provider. This announcement should not be a surprise.
In February of this year, supply chain management planning and execution applications technology provider JDA Software announced that the company would rebrand itself to be named Blue Yonder. As a reference, JDA acquired German based artificial intelligence and retail applications technology provider Blue Yonder in August of 2018. No financial terms were disclosed at the time of that acquisition, and Blue Yonder was destined to be an operating division of JDA. Then, there was a broader change of direction.
The February announced corporate name change was described as part of a re-branding initiative to better align the company’s name with its Cloud transformation and product roadmap.
Supply Chain Matters perspective on the February announcement questioned why would JDA want to undergo such an expensive re-branding?
Part of that answer arrived today with an announcement that Japan based consumer electronics provider Panasonic is taking a 20 percent equity stake in the company.
Today’s announcement indicates that the investment via a secondary sale of shares values Blue Yonder at an enterprise value of $5.5 billion. It reportedly builds upon a strong strategic relationship between the two companies, including a joint venture in Japan announced in April 2019. Panasonic will have a 20 percent minority ownership stake and one seat on the Board of Directors of Blue Yonder.
Panasonic’s businesses range from branded consumer electronics, but of late have been more directed at broader industrial, retail and service-based business technologies. Supply Chain Matters has profiled the often up and down relationship among Tesla Motors and Panasonic, as the primary supplier of the automotive batteries produced at Tesla’s Nevada based Gigafactory.
Once again, amid a lot of expensive marketing build-up and pizazz, a manufacturing company has elected to invest in a supply chain technology provider.
For the legacy JDA brand, an attempt by Honeywell International to acquire the company in 2016 for a then reported sum of $3 billion did not consummate. At that time, JDA was under ownership of private equity firm New Mountain Capital and was burdened with $2 billion of debt. Honeywell’s stated motivation in the acquisition attempt was to beef-up its sensing, productivity and automation solutions division, but the talks broke down with no clear explanation.
Now, a Japan based industrial and consumer electronics manufacturer has teamed-up to integrate Blue Yonder’s software with Panasonic’s connected technology for the manufacturing, logistics and retail industries, including Edge systems automation.
Today’s announcement notes, in-part: “The expanded partnership between Panasonic and Blue Yonder will accelerate the promise of the Autonomous Supply Chain. Harnessing the edge via the Internet of Things (IoT), Blue Yonder’s platform utilizes machine learning to drive faster, more context-aware business decisions — all to deliver autonomous outcomes.” A quote from the CEO of Panasonic’s Connected Solutions Company indicates the partners aim to become a global leading provider of frontline process innovation, especially for the Japan market. Blue Yonder CEO Girish Rishi indicates that the developed technology can be applied to the manufacturing floor, the warehouse shelf or to trucks and fleets.
Our Initial Take on Today’s Announcement
In February we wrote:
“Total rebranding of a technology company is not an unusual event, especially in the light of corporate takeovers, major equity investment events or recovery from a financial crisis. In other words, a tech company corporate re-brand has to be anchored in clear and understandable context and strategic direction.”
Now, two months later, the latter statement: “anchored in clear and understandable context and strategic direction” once again applies.
Indeed, Blue Yonder (JDA) product strategy has vacillated back and forth among manufacturing or retail industry supply chain planning and response management applications offerings, a totally Cloud SaaS based technology stack, and with Blue Yonder, an AI based retail technology support perspective. Of late, the market target appeared more to be retail industry and channel partner concentrations. Recent announcements have been concentrated on notable retail brands such as Marks and Spencer, True Value, Walmart and Wayfair, among others. We also question how a market value of $5.5 billion was determined, especially in the current economic climate.
Panasonic brings a product development direction toward digital manufacturing and Edge systems, including Internet-of-Things technology and applications integration.
Online retail and industrial manufacturing support systems are two distinct market segments and have the risk of confusing customers as to where the emphasis will be in future direction and resource allocation.
Once again, we advise Blue Yonder and/or JDA installed base customers or prospects to keep a keen eye on ongoing developments related to this now revealed Panasonic strategic relationship. The focus should be on where development and support resources will be focused, and what specific industry vertical support strategies will the company be invested within over the foreseable future.
Broader Market Trend
A further, and applications technology market pertinent perspective are other prior announcements from manufacturers and/or retail businesses making either equity investments or strategic partnerships with either ERP technology or supply chain technology providers. Most of these transactions have been orchestrated by private equity interests and we surmise an overall market strategy playing out, with dimensions that are different.
The most notable has been Koch Industries initial equity investment in technology provider Infor, followed by last month’s announcement of the full acquisition of the ERP and B2B supply chain technology platform provider to become a technology development division for Koch’s internal digital transformation needs. The announcement similarly emphasized that the ERP provider has been a key component of Koch’s technological transformation, with more than $26 billion in technology-related investments in the past six years, transforming a global portfolio of businesses spanning multiple industries. The Koch investment in Infor involved the presence of a private equity partner selling its remaining shares in the company to an industrial manufacturer and services conglomerate.
Another smaller scope example is likely China online retailer JD.com strategic relationship with supply chain network design, planning and now AI based analytics provider Llamasoft. We viewed the latter as an indicator of growing interest in being a regional distributor of advanced analytics technologies applied to online B2C focused customer fulfillment business processes.
Such trends may point to either future exit strategies or means for advanced technology providers to be strategically aligned with industrial or online retailer strategic transformation needs. From our lens, there are other supply chain technology providers with likely similar initiatives behind the scenes.
We will continue to monitor this development and provide a further update as information becomes available.
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