i2 Acquires Aspect for $9.3B  

Mountain View, Calif.; March 15, 2000 - i2 Technologies, Inc., co-founded by Sanjiv Sidhu and Ken Sharma, announced March 13 that it has forged a deal to acquire Mountain View, Calif.-based Aspect Development, Inc. for $9.3 billion in stock.

The partnership will solidify i2 Technologies' already-strong position in the electronic commerce marketplace.

The chairman and chief executive officer of Aspect, a global leader in business-to-business solutions, is Romesh Wadhwani.

"Both of us joining really creates a B2B juggernaut in e-commerce," Sidhu, i2's chairman and chief executive, told The Wall Street Journal.

"Our combined company has the most complete vision for the e-marketplaces," Wadhwani later told Reuters news service. "We have the scale that global trading partners need and the best B2B technology platform available today."

"The merger will create a B2B marketplace powerhouse with unmatched solution breadth and depth of functionality, unparalleled content, and a laser-focus on value creation," added Sidhu, a former Texas Instruments engineer who founded i2 to improve management procurement efficiency in 1988.

The two companies already have an alliance, where they sell each other's products, and complement each other's businesses, the two executives said.

Under the deal, i2 will exchange 0.55 of its shares for each share of Aspect, after the effect of a 2-for-1 split. Aspect shareholders will own approximately 18 percent of the combined company.

For the transaction, i2 will issue or reserve for issuance approximately 44.9 million shares of i2 common stock. Based upon i2's closing price March 10, the total value of the transaction was about $9.3 billion, taking into account all outstanding stock and stock options of Aspect.

I2 shares fell 16-13/16 to 191-3/16 March 13. They've risen more than 15-fold in the previous 12 months. Aspect rose 11-13/16, or 14 percent, to 96-13/16. The shares have risen more than sevenfold in the past year.

The combined revenues of i2 and Aspect in 2000 will make it the largest provider of software and content for B2B, the company said.

With 4,000 employees and a research and development budget of nearly $1 million per business day, the combined company has by far the largest base of technology and expertise in the market sector, analysts said.

I2 has been locked in a two-way race with Manugistics Group Inc. for leadership in an emerging class of business software known as "supply-chain management," which helps companies keep track of parts and supplies from vendors to improve production and delivery of goods. Last fall, i2 introduced its "TradeMatrix" concept, a set of programs and communications standards that lets individual businesses and whole industries create online marketplaces, a move that won it clients including Caterpillar and Sun Microsystems.

Last week, International Business Machines Corp. and Ariba Inc. formed an alliance with i2 for IBM to resell i2 and Ariba products through its global sales force. (See Business Briefs.)

At closing, Aspect will become a subsidiary of i2 with Wadhwani becoming vice chairman of i2 and a member of the company's board of directors.

In addition, i2 announced March 13 it has entered into a definitive agreement to acquire San Francisco-based Supplybase Inc., a leading provider of solutions for web-based product design and sourcing of custom parts and assemblies.

Supplybase delivers content to more than 100,000 suppliers. Under the agreement, i2 will issue or reserve for issuance approximately 1.8 million shares of i2 common stock, valued at approximately $380 million, for all of the outstanding stock and stock options of Supplybase.

Both transactions are expected to be neutral to 2000 cash earnings and accretive to 2001 cash earnings, i2 said.

"Customers are the big winners in this merger," said Dennis Stradford, Supplybase's chief executive officer. "We think customers will want to make our platform their standard for B2B."

Sidhu is the developer of the Constraint Anchored Optimization algorithm, a method of minimizing the constraints to factory performance. At TI's Artificial Intelligence Laboratory he led successful scheduling software products.