Nikkei Asia, citing multiple sources familiar with the matter, is reporting that Japan based high tech device producer Panasonic is set to acquire supply chain software applications technology provider Blue Yonder for a reported sum of upwards of $6.5 billion.
According to this report (Paid subscription or metered view), sources had indicated that the deal is in the final stages but cautions that there is the possibility that the two sides will not reach a final agreement.
This deal, if consummated would reportedly represent the Panasonic’s largest since its acquisition of Sanyo Electric in 2011.
This report points out that such an acquisition by Panasonic would represent: “a major change in the business model of the manufacturing industry, which until now has been based on selling goods.”
In May of 2020, Supply Chain Matters alerted readers to an announcement that Panasonic had taken a 20 percent minority equity stake in the supply chain applications technology provider. The announcement in May included an estimated market value of Blue Yonder to be upwards of $5.5 billion.
Panasonic noted at that time that an expanded partnership would aim to accelerate the promise of the Autonomous Supply Chain, harnessing Edge system capabilities such as the Internet of Things (IoT), applied to the manufacturing floor, the warehouse shelf or to trucks and fleets.
In its reporting, Nikkei reinforces in its reporting that the high-tech manufacturer seeks to leverage its hardware manufacturing by combing it with integrated software offerings, adopting a more recurring revenue business model, similar to other Japan based high tech companies such as Sony and Hitachi. Further reported is that integrating acquired companies has been a prior challenge for Panasonic.
Supply Chain Matters Perspective
If this acquisition does occur, it would be a sign that Panasonic is all-in in this integrated Edge system business strategy. Such a deal would also represent a significant windfall to Blue Yonder’s major investors, Blackstone and New Mountain Capital.
As we observed in our May 2020 commentary, 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.
In Supply Chain Matters prior highlighting of published 2021 Predictions, our research arm has predicted higher levels of acquisition developments involving certain segments of the supply chain management technology segment. We also shared our belief that the supply chain tech sector could provide the potential of a couple of blockbuster tech announcements this year. This deal, if consummated would represent one of them in terms of scope and impact.
Once again, we advise Blue Yonder and/or JDA installed base customers or prospects to keep a keen eye on ongoing developments. The focus should be on where Panasonic elects to prioritize joint development, existing Blue Yonder market support and support resources going forward. This could well be a potential for a clash of corporate cultures.
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