Friday, April 29, 2011

Electronics distributors post strong results

Arrow reports strongest first-quarter results in company’s history; Avnet reports 40% growth for fourth straight quarter

The electronics sector continues to perform well despite lingering concerns about the potential impact on the industry from the Japan earthquake and tsunami in March. Two of the industry’s leading distributors reported strong sales and earnings this week, noting continued demand for electronics and computer products worldwide.

Arrow Electronics reported first-quarter profit of $136.3 million on sales of $5.22 billion. The distributor’s global sales of electronic components hit $3.89 billion, a 24% increase over the previous year, while its enterprise computing solutions sales reached $1.34 billion, a 21% increase over the prior year.

"Our growth strategy and the related momentum we built throughout the second half of 2009 and 2010 have carried over into the first quarter of 2011, with the Arrow team generating the strongest first-quarter results in our history. Revenue and earnings per share came in well ahead of our expectations, driven by strength in both of our business segments," said Michael J. Long, president and CEO.

At Avnet, sales rose 40% in the fiscal third quarter ended April 2, marking the company’s fourth consecutive quarter of 40% year-over-year growth.

Avnet Electronics Marketing, its electronic components business, saw record revenue of $3.93 billion, a 36% increase year-over-year and a 10% sequential increase. The company said demand for electronic components remained strong during the quarter in all of its main regions, noting that growth was strongest in Europe, the Middle East and Africa.

Sales for Avnet Technology Solutions, its computer-related business, rose 47% year-over-year.

Looking ahead, Avnet noted the potential impact of the Japan earthquake and tsunami in the June quarter, citing a wider than normal sales and earnings range. Overall company sales are estimated at between $6.6 billion and $7.3 billion, with earnings per share of between $1.10 and $1.22.

“While it is difficult to gauge the impact of the Japan earthquake and tsunami on our June quarter revenue, we continue to work closely with our suppliers to understand what products are most impacted and meet the needs of our supply chain customers,” the company said in a statement announcing the results.

Thursday, April 28, 2011

Kennametal sales soar 25% in Q3

Company also raises guidance for remainder of fiscal 2011

Kennametal Inc. today reported record third quarter fiscal sales of $615 million, a 25 percent increase compared to the same quarter last year.

Carlos Cardoso, Kennametal's Chairman, President and Chief Executive Officer said, "March quarter results continue to demonstrate that our global team is successfully executing our established strategies. We realized organic sales growth of 25 percent year-over-year, despite strong comparisons from the prior year. This growth reflected higher customer demand in both our served end markets as well as geographic regions. Even at a sales level that is lower than prior peak, we achieved a record operating margin for the March quarter. In addition, we again increased our guidance for sales and earnings per share for the current fiscal year. We continue to outperform the forecasted industrial production rate and expect to maintain our strong operating leverage."

Cardoso added, "Our long-term strategies remain consistent -- we continue to balance our served end markets, business mix and geographic presence. Kennametal is a 'Breakaway' company that has demonstrated its ability to be profitable throughout the economic cycle."

Here is a breakout of Kennametal’s segments for the quarter:
• Industrial segment sales of $392 million grew 28 percent from $306 million in the prior year quarter, driven by organic growth of 29 percent and a 1 percent favorable foreign currency impact, partially offset by an unfavorable impact due to fewer business days. On an organic basis, sales increased in all served market sectors led by strong growth in general engineering and transportation sales of 34 percent and 29 percent, respectively. On a regional basis, sales increased by approximately 32 percent in Asia, 29 percent in Europe and 23 percent in the Americas.
• Industrial segment operating income was $54 million compared with $11 million for the same quarter of the prior year. Absent restructuring and related charges recorded in both periods, Industrial operating income was $56 million compared with $26 million in the prior year quarter. The primary drivers of the increase in operating income were higher sales volume and price realization, improved capacity utilization and incremental restructuring benefits. These benefits were partially offset by higher raw material costs and the restoration of temporary cost reductions. Industrial adjusted operating margin increased to 14.3 percent from 8.6 percent in the prior year.
• Infrastructure segment sales of $223 million increased 19 percent from $187 million in the prior year quarter due to organic growth. The organic increase was driven by higher sales in the energy and earthworks markets of 21 percent and 17 percent, respectively. On a regional basis, organic sales increased by approximately 20 percent in the Americas, 15 percent in Asia and 11 percent in Europe.
• Infrastructure segment operating income was $36 million, compared with $19 million in the same quarter of the prior year. Absent restructuring and related charges recorded in both periods, Infrastructure operating income was $37 million in the current quarter compared with $26 million in the prior year quarter. Operating income improved primarily due to higher sales volume and price realization, increased capacity utilization and incremental restructuring benefits, partially offset by higher raw material costs and the restoration of temporary cost reductions. Infrastructure adjusted operating margin increased from the prior year quarter to 16.5 percent from 13.8 percent.

Kennametal executives in a press release said global economic conditions and worldwide industrial production continues to remain positive. As such, Kennametal expects its fiscal 2011 organic sales growth to be 24 percent to 25 percent. This is in line with our goal of growing at least two times the rate of increase in global industrial production.

The company expects EPS for fiscal 2011 to be in the range of $2.75 to $2.85 per share, excluding charges related to previously announced restructuring programs, increased from the previous range of $2.50 to $2.65 per share, excluding charges related to restructuring.

Kennametal also announced that its Board of Directors declared a regular quarterly cash dividend of $0.12 per share. The dividend is payable May 25, 2011 to shareowners of record as of the close of business on May 10, 2011.

Wednesday, April 27, 2011

Parker Hannifin reports record Q3 results

Sales increase 24 percent; company raises guidance for year

Diversified manufacturer Parker Hannifin Corporation today reported record results for the fiscal 2011 third quarter ended March 31, 2011. Fiscal 2011 third quarter sales were $3.2 billion, a third quarter record representing an increase of 23.9 percent from $2.6 billion in the same quarter a year ago. Net income was an all-time quarterly record of $281.6 million, an increase of 82.4 percent from $154.4 million in the third quarter of fiscal 2010. Earnings per diluted share for the quarter were also an all-time quarterly record at $1.68, compared with $0.94 in last year's third quarter.

Parker manufactures a number of products ranging from motion and control technologies, hose and accessories such as valves and fittings.

"Our third quarter performance reflects the continued strength that we see across our end markets and regions and our ability to leverage that strength into higher operating margins and record quarterly earnings per share," said Chairman, CEO and President Don Washkewicz. "Customer orders also increased significantly in the quarter. All segments reported a double-digit increase in sales and order levels. Total organic sales increased 21 percent in the quarter with acquisitions contributing 1 percent and currency contributing 2 percent. Margin performance was also a positive as total segment operating margin was a third quarter record of 14.8 percent, led by Industrial North America segment margin of 16.1 percent and Industrial International segment margin of 15.5 percent. Further reflecting our continued strong balance sheet and cash flow, the Board of Directors today approved a 16 percent increase in our quarterly dividend from 32 cents to 37 cents per common share."

In the Industrial North America segment, third quarter sales increased 23.0 percent to $1.2 billion, and operating income was $189.5 million compared with $133.6 million in the same period a year ago.

In the Industrial International segment, third quarter sales increased 29.9 percent to $1.3 billion, and operating income was $199.8 million compared with $109.3 million in the same period a year ago.

In the Aerospace segment, third quarter sales increased 12.1 percent to $503.8 million, and operating income was $69.0 million compared with $49.8 million in the same period a year ago.

In the Climate and Industrial Controls segment, third quarter sales increased 24.9 percent to $264.5 million, and operating income was $22.6 million compared with $16.3 million in the same period a year ago.

The company reported the following orders by operating segment:
• Orders increased 20 percent in the Industrial North America segment, compared with the same quarter a year ago.
• Orders increased 22 percent in the Industrial International segment, compared with the same quarter a year ago.
• Orders increased 44 percent in the Aerospace segment on a rolling 12-month average basis.
• Orders increased 14 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.

For fiscal 2011, the company has increased guidance for earnings from continuing operations from the previous range of $5.80 to $6.20 per diluted share to a new range of $6.20 to $6.40 per diluted share.

Washkewicz added, "Our performance year-to-date reflects the ongoing economic recovery and the continued execution of our Win Strategy, now in its tenth year. Parker continues to position itself favorably for continued earnings growth by focusing on premier service to our customers, lean operations and ongoing investments in leading edge innovations across the company. Parker expects to deliver record earnings in fiscal 2011, with a strong order backlog going into fiscal year 2012."

Infor acquires Lawson Software for $2 billion

Infor,investment firm had been in negotiations with Lawson since March

Lawson Software Inc. has signed a definitive agreement to be acquired by GGC Software Holdings, Inc., an affiliate of Golden Gate Capital and software provider Infor, in a transaction valued at approximately $2 billion. Under the terms of the merger agreement, stockholders of Lawson will receive $11.25 per share in cash.

The announcement marks the culmination of Lawson Software’s evaluation of strategic alternatives and review and negotiation of a proposal from Golden Gate and Infor that began prior to, and was later publicly confirmed in a press release on March 11, 2011. During its evaluation, Lawson conducted a comprehensive market assessment and contacted other potential acquirers including competing global providers of enterprise applications and financial buyers.

"We are pleased to have entered into a transaction that will offer Lawson stockholders an attractive valuation," said Harry Debes, Lawson's president and chief executive officer. "After a thorough examination of the strategic alternatives available to the company as well as extensive discussions with Golden Gate and Infor, Lawson's board unanimously concluded that this transaction is in the best interests of the company and our stockholders."

The deal is expected to close in the third quarter

Friday, April 22, 2011

Distributors continue strong performance

Applied Industrial, others cite solid gains driven by strength in the industrial sector

Citing continued strength in the manufacturing sector, some of the industry's largest publicly traded distributors reported solid sales and earnings this week.

Power transmission/motion control distributor Applied Industrial Technologies reported sales of $566 million for its fiscal third quarter, a 16% increase compared to the same period last year. Company chairman and CEO David Pugh said the results were fueled by a solid industrial economy.

"While we expect this economy to continue its recovery and to deliver a positive ongoing impact, such issues as oil prices and geo-political events dictate that we also maintain a focus on the underlying fundamentals of our business," Pugh said in a statement announcing the results this week.

Applied's results followed a similar strong performance from power transmission/motion control distributor Motion Industries last week. Motion's parent company, Genuine Parts Co., cited a 24% gain for Motion in the first quarter as sales rose to $999.7 million comapred to the same period a year ago. GPC also noted strong performance for EIS, Inc., its electrical group, which genreated a 39% sales increase.

"Both Motion Industries and EIS sell into the manufacturing sector of the economy, which began its recovery in 2010 and continues to perform well today," Thomas C. Gallagher, GPC's chairman, president and CEO said in a statement announcing the results.

Other distributors citing strong results this week include W.W. Grainger, which posted first-quarter sales of $1.9 billion, up 13% compared to the same period last year, and WESCO International, which reported a 25% sales gain in the first quarter, to $1.43 billion.

Wednesday, April 20, 2011

Minarik acquires Automation Technology

Kaman Industrial Technologies subsidiary expands in the Intermountain and Pacific Northwest regions

Kaman Industrial Technologies subsidiary Minarik Corp. has acquired Automation Technology, Inc., with locations in Salt Lake City, Utah, and Boise, Idaho. The deal adds to Minarik’s locations in Portland, Seattle and Denver, expanding the distributor’s business in the Intermountain and Pacific Northwest regions.

Minarik is a value-added distributor of motion control products; Automation Technology, Inc. is a strong motion control player in its region.

“We are very pleased to be able to continue Minarik’s market expansion with the acquisition of Automation Technology. Their knowledge of the market and technical expertise, coupled with the resources of Minarik and Kaman will offer the Intermountain and Northwest markets superior products with unequalled application support and service,” Andy Reid, Kaman’s area vice president, Minarik, said in a statement announcing the acquisition.

Friday, April 15, 2011

Graco will buy ITW unit for $650 million in cash

ITW unit had sales of $305 million in 2010

Graco, Inc. is buying the operations of the finishing business of Illinois Tool Works for $650 million in cash.

The ITW business makes and distributes equipment for industrial liquid finishing, powder coating and automotive refinishing worldwide.
The ITW business had revenue of $305 million in 2010.

The deal is expected to close sometime in June.

ITW's finishing business has about 40 percent of its sales coming from North America with significant operations in the United States, Switzerland, the United Kingdom, Japan, Brazil and Mexico. Its brands include Binks, Gema, Ransburg, DeVilbiss and BGK Finishing Systems.

Graco, which makes paint sprayers and fluid-handling equipment, said it plans to operate the businesses on a stand-alone basis and not integrate facilities, sales forces or distribution.

Graco's Chief Executive Officer Pat McHale said, "This acquisition is an excellent strategic fit with Graco's Industrial segment. It will advance all of our stated core growth strategies: new products and technology, geographic expansion, and new markets. We gain a leading position in industrial powder paint equipment – a growing global market where we have no offering today. In liquid finishing, the acquired product technologies are complementary to Graco's Industrial offering and also give us a leading position in automotive refinish where we have little presence. The acquired businesses generate two thirds of revenue outside North America, increasing our critical mass in important international and emerging markets. This transaction will bring several widely recognized premium brands to Graco, a strong distribution channel, an installed base and approximately 40 percent of revenue from parts and accessories."

Thursday, April 14, 2011

Inventories, sales increased in February

Report indicates orders will be rising

Business inventories rose 0.5 percent in February, marking the 14th consecutive monthly increase , according to a report from the U.S. Commerce Department. Sales increased for the eighth consecutive month, indicating that factory orders will be rising in the next few months.

Combined sales by manufacturers, wholesalers and retailers increased 0.2 percent during the month.

The inventories increase means that stockpiles rose to $1.46 trillion in February. It is 10.7 percent higher than the recent low of $1.32 trillion reached in September 2009.

Sales rose at the manufacturing and retail levels, but declined 0.8 percent at the wholesale level.

Tuesday, April 12, 2011

Fastenal sales climb 23% in 1Q

Fastenal expects to open 150-200 stores this year

Fastenal, the giant MRO distributor headquartered in Minnesota, reported a 23 percent sales increase for the first quarter ended March 31, continuing its strong growth during 2010.

The company said several additional factors positively impacted its sales growth in the first quarter: the strengthening Canadian dollar (when compared to the United States dollar) that added approximately 0.7 percentage points to its daily sales growth in both 2011 and 2010 and its Holo-Krome business, which was acquired in December 200 that added approximately 0.5 percentage points to Fastenal’s daily sales growth in 2009, as there were no comparable sales in 2009.

In July 2010, Fastenal indicated its intention to open 80 to 95 new stores during the second half of 2010 (or an annualized rate of 6.8% to 8.0%). During the second half of 2010 the company opened 82 stores. In 2011, Fastenal intends to open 150 to 200 new stores, or an annualized rate of 6.0% to 8.0%. In the first quarter of 2011, Fastenal opened 37 new stores.

Monday, April 11, 2011

Schneider may be interested in Tyco

Deal would allow Schneider to expand beyond electric-grid management

Paris-based Schneider Electric SA is looking at possibly acquiring Tyco International, Bloomberg News is reporting. Bloomberg said Tyco would help Schneider expand beyond electric-grid management by adding ADT, the biggest securities firm owned by Tyco, as well as fire-prevention equipment and services.

Thursday, April 7, 2011

Tramec LLC acquires Hill Fastener Corp.

Company will be named Tramec Hill Fastener, LLC

Fastener manufacturer Tramec LLC, has acquired the Hill Fastener Corporation located in Rock Falls, Illinois, This acquisition positions Hill Fastener as an integral part of the Tramec LLC fastener business, Tramec said. The acquisition will solidify the Tramec's presence in the industrial fastener market and creates instant synergies for both Tramec and Hill Fastener businesses, according to company officials.

Gary Sullo, president of Tramec LLC said, "The value proposition for both companies' customers will be immediately enhanced. The strategic acquisition of Hill Fastener adds manufacturing expertise to Tramec and represents a unique transaction where the sum of these two companies exceeds the individual components. We are enthusiastic about this acquisition, which is named Tramec Hill Fastener, LLC."

In a press release, Robert Hill, owner of Hill Fastener added, "I have had nearly 40 years of experience working here and it has always been my business strategy that, at the right time, Hill Fastener would be turned over to a company like Tramec LLC. As promised, our employees will be retained and the business will remain in the community where my father started it in 1957. I am very gratified by what has occurred for Hill Fastener and its employees."

The Tramec LLC product portfolio services the heavy-duty tractor and trailer OEM and aftermarket businesses, as well as the industrial market.

Tramec LLC is a business within the MacLean Investment Partners (MIP) portfolio owned by the MacLean family. This acquisition fits nicely with the long-range investment strategy to diversify manufacturing capabilities and customer base.

Wednesday, April 6, 2011

Regal Beloit acquires Virginia firm

This is Regal Beloit's the third acquisition in past four months

Regal Beloit Corporation (NYSE: RBC) today announced that it has acquired Ramu, Inc., a motor and control technology company headquartered in Blacksburg, Virginia, backed by the venture capital firm Khosla Ventures.

Ramu, Inc. is a startup company founded by Krishnan Ramu with a research and development team dedicated to the development of switched reluctance motor

Switched reluctance technology is a unique motor design that is suitable
for applications requiring improved operating efficiencies, high operating speeds or high ambient temperature conditions. An additional strategic feature of switched reluctanceis that it does not utilize permanent magnet materials to create the operating torque ofthe motor.

Ramu, Inc.’s current management and technical leadership will continue to lead the
research and development efforts at Ramu, Inc., which will remain headquartered in
Blacksburg, Virginia. This team will be focused on expanding Ramu, Inc.’s current
portfolio of multiple patents and patent applications as well as integrating this
technology into Regal Beloit’s broad motor portfolio for commercialization across
multiple Regal Beloit brands.

“We see potential differentiated value for our customers if we are able to successfully integrate this technology into our energy efficiency motor portfolio,” said Henry Knueppel, chairman and chief executive officer of Beloit-Il. based Regal Beloit.

Regal Beloit Corporation is a manufacturer of mechanical and electrical motion control and power generation products serving markets throughout the world. RegalBeloit is headquartered in Beloit, Wisconsin, and has manufacturing, sales, and servicefacilities throughout the United States, Canada, Mexico, Europe and Asia. RegalBeloit’s common stock is a component of the S&P Mid Cap 400 Index and the Russell2000 Index.

This is the third acquisition announced by Regal-Beloit in the past few months.

MSC sales soar 22.2% in Q2

Rutland Tool acquisition adds $6.6 million in sales

MSC Industrial Direct, one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations ("MRO") supplies to industrial customers throughout the United States, today reported that net sales for its second quarter rose 22.2% to $483.4 million, compared with $395.5 million in the prior year period.

Operating income increased 61.6% in the fiscal 2011 second quarter to $80.6 million, or 16.7% of net sales, from $49.9 million, or 12.6% of net sales, in the second quarter of fiscal 2010. For the second quarter of fiscal 2011, the Company reported net income of $49.7 million, an increase of 62.1% over net income of $30.6 million in the second quarter of fiscal 2010.

During the quarter, the Company completed the integration of its previously announced acquisition of Rutland Tool & Supply Co.. The company's results for the quarter included $6.6 million in sales from Rutland. Excluding acquisition and integration costs, Rutland broke even for the period. Pre-tax acquisition and integration costs incurred by the Company during the quarter were $1.65 million, resulting in a dilution of $0.016 per share, which was better than prior expectations.

Net sales for the first half of fiscal 2011 were $956.2 million, compared with net sales of $780.3 million in the first half of fiscal 2010.

David Sandler, President and Chief Executive Officer said, "I'm absolutely delighted with our performance and the strong financial results that our team delivered, driven by excellent execution, stronger demand across our customers than originally anticipated and continued gains in market share. We continue to execute against our strategic plan, delivering the growth in sales, earnings, and operating margin percentage that we were confident would result from our investments and model in a recovering market."

Erik Gershwind, Executive Vice President and Chief Operating Officer, stated, "We achieved strong results in the quarter led by significant growth within our core customer base. Our strong gross margin of 46.8% is primarily a function of improved rebates, excellent realization of the pricing adjustment we made around the holidays, and the growth in our core business. During the quarter, we also successfully completed the Rutland integration ahead of schedule, and that business delivered better results than we originally anticipated."

Mr. Sandler concluded, "Our results demonstrate the inherent leverage and power of our business model. We have seen significant benefits from our strategic growth programs, and we will continue to invest in these initiatives going forward. We are very encouraged by our progress, the performance of our investments, and recent strong economic trends, all of which bode well for the future."

For the fiscal 2011 third quarter, the Company expects net sales to be between $524 million and $536 million and expects diluted earnings per share for the third quarter of fiscal 2011 to be between $0.90 and $0.94.

Tuesday, April 5, 2011

ProBuild buys Harbert Lumber

ProBuild continues its expansion

ProBuild, one of the largest construction supply distributors in the country,, has acquired the assets of Harbert Lumber, a Grand Junction, Colo.-based LBM operation, according to ProSales magazine.

ProBuild, headquartered in Denver, currently operates a business office and lumberyard in Grand Junction.

ProBuild currently operates 10 locations around Colorado.

"The addition of Harbert Lumber will enable ProBuild to service the growing needs of our customers in Colorado, particularly in the mountain towns where we have not had a robust presence until now," said Bill Myrick, president and CEO of ProBuild. "Within each market, ProBuild will combine local market expertise with the strength and scale of a national industry leader to continue delivering on the needs of our customers and partners."
Harbert Lumber has four facilities within Colorado: Grand Junction, Aspen, Steamboat Springs, and Glenwood Springs, the magazine said,

Zep sales increase 15% in Q2

Industrial marets helped drive sales

Zep, Inc. a producer of cleaning and maintenance solutions,reported today that revenue for the second quarter of fiscal 2011 increased approximately 15% to $146.8 million, compared with $127.4 million in the same period of the prior year. Earnings before interest, income tax, depreciation, and amortization expenses and excluding restructuring, special items, and acquisition-related expenses (adjusted EBITDA) totaled $9.9 million, an increase of $4.3 million or 76% from the second quarter of fiscal 2010.

John K. Morgan, Chairman, President and Chief Executive Officer, said in a press release: "We are encouraged by the quarter's top-line results as we begin to see improving trends throughout our business. The business delivered significant top- and bottom-line expansion due to continued strong performance from our acquired platforms as well as growth in our legacy operations. Revenue from a number of the end markets we serve - specifically industrial, food and transportation - showed noteworthy improvement when compared to the year-earlier period. We are particularly pleased to be seeing a return to organic growth as a number of key initiatives are beginning to bear fruit. Adjusted EPS improvement of more than 60% illustrates the dedication of our associates' to focus on top-line growth initiatives while controlling cost during a prolonged economic recovery."

Mr. Morgan continued, "We made significant progress preparing our operations to further integrate the Waterbury business. We completed, four months ahead of schedule, a new, three-year collective bargaining agreement for the Atlanta manufacturing and distribution locations. This milestone and other operational improvements prepare the business for anticipated increased demand and clear the way for the final steps of integrating the Waterbury production into our existing facilities."

Monday, April 4, 2011

Apax Partners acquires Activant and Epicor Solutions

The combined company will have 30,000 customers; $825 million in revenue

Activant Solutions Inc., a provider of ERP and point-of-sale software serving mid-market retailers and distributors, today announced that it has entered into a definitive agreement to be acquired by Apax Partners, a private equity firm with a history of technology investment. Activant is currently owned by investment funds affiliated with Hellman & Friedman LLC, Thoma Bravo, LLC and JMI Equity, and by management.

Apax also announced today that it is has entered into a definitive agreement under which funds advised by Apax will acquire Epicor Software Corporation (NASDAQ: EPIC), a provider of enterprise business software solutions for the mid-market and the divisions of global 1000 companies. Apax intends to combine Activant with Epicor to create one of the largest global providers of enterprise applications focused on the manufacturing, distribution, services and retail sectors. Following completion of the merger, the combined company will be called Epicor Software Corporation.

"This transaction is extremely positive for Activant’s customers, employees and investors alike," said Pervez Qureshi, Activant president and CEO. “Our market leadership and expertise in distribution perfectly complements Epicor’s expertise in the manufacturing and services sectors. Together, Activant and Epicor’s retail business solutions can now cover the full spectrum of retailing − from small hardlines retailers, to national specialty softgoods and apparel chains, to global general merchandise department stores. Additionally, with Epicor’s worldwide infrastructure, we will have the opportunity to service and support Activant products internationally, which is very important as our customers compete in an increasingly global business environment.”

“With Apax, we are partnering with one of the premier investment firms in the world and one that is very much focused on growth and delivering value to the customers of its portfolio companies,” continued Qureshi. “The combined company will have over 30,000 customers, $825 million in annual revenues, and the most visionary business application software and vertical industry expertise in the market today. Apax is committed to growing the businesses in which they invest and has an excellent track record of working as a strategic partner with management to build high-growth companies.”

Under the terms of the agreement, all of Activant’s outstanding shares and stock options will be acquired for cash. Upon completion of the transaction all of
Activant’s outstanding 9-1/2% Senior Subordinated Notes will be redeemed and Activant’s senior secured indebtedness will be repaid. Apax has received debt commitment letters from Bank of America, N.A. and Royal Bank of Canada to provide the debt necessary to close the acquisitions. The acquisition of Activant is conditioned upon the concurrent closing of Apax’s acquisition of Epicor, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions. Activant expects that the acquisitions will close by the end of the second calendar quarter of this year.

"We are extremely excited to be bringing together two of the premier enterprise software companies to create a global market leader,” said Jason Wright, a partner at Apax Partners. “Activant and Epicor are both true innovators and extremely well positioned in the enterprise applications software space. Both Epicor and Activant customers will benefit from the combined entity’s increased scale, solutions portfolio and expanded service offerings. Epicor will gain access to significant additional domain expertise, particularly in hardlines retail, automotive and wholesale distribution, while Activant will benefit from an accelerated roadmap to international operations and additional supply chain and manufacturing functionality.”

“In addition to the immediate product and service portfolio enhancements,” Wright continued, “both companies’ customers will further benefit from the strong financial backing of Apax Partners and our commitment to building the new Epicor into the global leader for enterprise business applications in manufacturing, distribution, retail and services. We look forward to partnering with the management team and to providing the resources and support that can accelerate the growth and expansion of the business and the value it creates globally.”