Manugistics Group Inc., a Rockville company that makes software to help companies manage their supply chains, announced yesterday it is buying Talus Solutions Inc., which makes pricing and revenue optimization software, for $366 million in stock.
It also announced earnings of 3 cents a share for the quarter ended Aug. 31, before special charges for repricing employee stock options. The earnings beat the estimates of analysts, who were expecting roughly a break-even quarter.
Deirdre Blackwood, a spokeswoman for Manugistics, said the company is looking for some "cross-pollination" - selling its products to Talus customers and vice versa - but also toward producing a broader product that would appeal to new customers.
She said the deal "builds on our strategy of investment in new solutions and new products." It is the largest acquisition in Manugistics history.
Privately held and based in Atlanta, Talus had $40 million in revenue last year, compared with $152 million for Manugistics. Manugistics said it expects the acquisition to depress per-share earnings for the next three quarters, but improve them after that.
It will issue 4.2 million to 5 million shares of stock, with the final number depending on its stock price. Manugistics shares closed yesterday at $86.785, up 25 cents for the day. The announcements came after the close of the market.
Manugistics is evaluating whether to move Talus employees to Rockville or continue operations in Atlanta, Blackwood said.
In its earnings report, Manugistics said it made, before the noncash charge, $1 million, or 3 cents a diluted share. That compares with a loss of $3.4 million, or 13 cents a share, in the year-earlier quarter.
After the stock options charges, the company had a loss of $19.7 million, or 69 cents a share.
Blackwood said stock options, which are offered to all employees, had been repriced last year after the stock price dropped sharply, as an incentive for workers to remain with the company. The company's stock price has been volatile, ranging from $9.0625 to $95.875 in the past year.
The noncash charge this quarter represents the difference between the original exercise price of the options and the new price, for all options which were exercised during the quarter. More charges will occur in future quarters, as more options are exercised, Blackwood added.
Revenue for the quarter was $58.2 million, up 72 percent from $33.8 million in the year-earlier period. Most of the revenue growth came in software license fees, which account for about half the company's revenue and grew 165 percent. The balance of the revenue comes from consulting and software upgrades, which grew at a much smaller rate.
Also, the company pointed out, the quarter included no revenue from a large deal with Cisco Systems Inc. that is expected to generate revenue in the third quarter.