Supply-chain software powerhouse Kinaxis has made a major move to shore up its product offerings and deepen its talent pool, finalizing a deal to acquire Netherlands-based order management platform MPO for US$45 million.
Under the agreement, which closed Monday, Kinaxis will pay about 75 per cent of MPO’s purchase price – or nearly $34 million – in cash. MPO shareholders will receive an equity stake in Kinaxis to cover the remaining amount, with the total payout dependent on the Dutch firm hitting certain revenue and execution goals.
Headquartered in Rotterdam, MPO has about 60 employees. It will remain a standalone subsidiary of Kinaxis, with co-founder and CEO Martin Verwijmeren and his C-suite colleagues reporting directly to Kinaxis’s senior management team.
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The privately held firm makes a cloud-based subscription software platform that helps ensure merchandise flows smoothly through all steps of the order and distribution process, including from manufacturing plants to warehouses and on to consumers’ doorsteps.
It’s a booming industry in the age of e-commerce. While Kinaxis would not disclose MPO’s revenues, the firm’s customer list now numbers in the hundreds and includes some of the world’s biggest companies such as IBM.
New capabilities
It’s also a part of the supply-chain management process that Kinaxis’s own RapidResponse platform – which helps manufacturers make sure they have the right amount of inventory on hand to fulfil existing orders – doesn’t currently address.
That made the Dutch firm a particularly compelling target as Kinaxis began scouting potential partners to fill out its product portfolio, company officials said Tuesday.
“To be honest, they really ticked a lot more boxes than we thought we’d find in a single company or solution,” Kinaxis vice-president of strategic operations Kris Reid told Techopia.
“To be honest, they really ticked a lot more boxes than we thought we’d find in a single company or solution.”
“We typically didn’t go that far down the path into (order and delivery) execution. This helps us to extend the overall set of capabilities that we can provide to our customers to deal with the types of challenges they face in today’s supply-chain world.”
The acquisition also helps Kinaxis tackle another issue that’s been keeping its HR department up at night: where to find enough workers.
After Monday’s deal, Kinaxis now has a headcount of more than 1,400 – up from fewer than 900 when the firm pulled the trigger on its last major M&A transaction two years ago, the $65-million acquisition of Toronto software firm Rubikloud.
Kinaxis has been on a tear since then as the pandemic wreaks havoc on supply chains, snarling traffic in major ports and disrupting the flow of raw materials and key components such as semiconductors to manufacturers around the world.
Kinaxis, which reports in U.S. dollars, booked revenues of more than $80 million in the second quarter ending June 30, up 35 per cent from the previous year. In its most recent earnings report last week, the company raised its full-year revenue projection to a high of $365 million.
But that rapid growth has tested the firm’s ability to add enough staff to its payroll to keep up with surging orders for its software.
CEO John Sicard told analysts last week that in contrast to scores of other tech firms that are slashing headcounts in the face of growing economic turbulence, Kinaxis is “aggressively looking to increase staff.”
With the deal for MPO, Kinaxis suddenly has access to dozens of engineers and salespeople who are well-versed in the supply-chain industry.
“We’re having a hard time finding people … and adding this type of talent and expertise is really key to us,” Reid explained on Tuesday.
Kinaxis shares closed the day at $165.85, down $1.80 in trading on the Toronto Stock Exchange.
