JBA users may be hit by Geac takeover

GEAC Computer has bought UK enterprise resource planning vendor JBAfor a knockdown #92.5 million, writes Simon Goodley.

The Canadian takeover specialist, which has an annual turnover of $800 million (£500m), is vague about its plans for the software firm. It confirmed that there 'may be some rationalisation' at JBA, but declined to discuss detailed plans for its ERP software, used by 3,000 users in Europe and 1,000 in the US, mostly mid-market manufacturing and retail firms.

Simon Bragg, an analyst at research group ARC, said that the announcement is bad for users. 'This is worrying,' he said.

'JBA has quite a lot of good technology in the pipeline, but to what extent will Geac continue product development? If it doesn't, it's simply a question of Geac milking JBA's service revenue base.'

Martin Brampton, an analyst at Bloor Research, agrees. 'Activities such as customer service generate profits, and I'd expect them to continue. However, some costly product roadmaps may be axed,' he said.

The takeover follows a tough 12 months at JBA, with losses for the fiscal year, restructured operations, and job losses.

The company's share price also fell to an all-time low. JBA's disappointing performance has followed similar results at high-end ERP vendors such as SAP and Oracle, who have turned to the mid-market to bolster their revenues, a move which has hit JBA.

Geac acquired JBA for less than a fifth of its annual turnover. 'Considering the third and fourth-placed ERP vendors, Baan and JD Edwards, are valued in the billions and JBA is arguably sixth, £92 million with JBA's strength in Europe looks a snip,' said Bragg.