NCR's $650 Million Retalix Buy Latest Software Consolidation

on November 29 2012 10:24 AM

 

Is anything left to buy now that NCR Corp. NYSE: NCR), the No. 1 maker of ATM equipment and point-of-sale terminals has agreed to acquire Israel's Retalix (Nasdaq: RTLX), one of the best-regarded developers of retail software?

The announcement came only four weeks after Retalix's principal rival, JDA Software (Nasdaq: JDAS) of Scottsdale, Ariz., agreed to be bought by private RedPrairie Corp. of Alpharetta, Ga., in a $1.9 billion deal.

The consolidation illustrates desire by retailers to automate as much of every transaction as possible, given that gross margins in some stores, such as supermarkets, are razor-thin.

The sector has been relatively quiet since database giants Oracle Corp. (Nasdaq: ORCL), of Redwood Shores, Calif., battled Germany's SAP (NYSE: SAP) for weeks in 2005 over Retek, a retail software specialist. Oracle finally won but paid $650 million for the Minnesota developer.

NCR, of Duluth, Ga., was the pioneer in developing cash registers in the 19th century and became one of the top computer makers in the 20th century and for a while was owned by AT&T (NYSE: T), the No. 1 telecommunications company.

But after becoming independent again, NCR has focused exclusively on financial transactions, spinning off Teradata Corp., (NYSE: TDC), one of the top vendors of data warehousing computers and software.

The acquisition leaves only a small number of publicly traded companies that could attract the eye of companies interested in e-commerce, such as International Business Machines Corp. (NYSE: IBM), Hewlett-Packard Co. (NYSE: HPQ), Amazon.com (Nasdaq: AMZN) and eBay (Nasdaq: EBAY).

Among them are SPS Commerce (Nasdaq: SPSC) of Minneapolis and VeriFone Systems (NYSE: PAY), of San Jose, Calif., which at one time was part of HP.

NCR CEO Bill Nuti said the purchase of Retalix was “a wonderful strategic fit” on a conference call late Wednesday. He noted that Retalix's software, which is largely geared to gas stations and convenience stores, would mesh well with NCR's, which serves larger retail stores and supermarkets.

NCR's financial adviser was JPMorgan Chase (NYSE: JPM) while Jefferies (NYSE: JEF) provided advice to Retalix.

Shares of NCR rose 16 cents to $23.91 in Thursday trading, while Retalix shares rose 6 cents $29.56, just under the $30 sale price, after a big run-up late Wednesday, when they started trading at $22.02.

VeriFone shares rose 17 cents to $30.39 while those of SPS Commerce rose 65 cents to $36.99.

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