FreeMarkets to acquire Adexa

FreeMarkets has signed a definitive agreement to acquire privately held Adexa, a provider of collaborative commerce solutions for e-business.

Under the terms of the agreement, FreeMarkets will issue a total of 17.25 million shares and options in exchange for all of the outstanding shares and options of Adexa. This represents an aggregate purchase price of approximately $340 million, based on FreeMarkets’ closing price on February 7, 2001.

The acquisition of Adexa, a company with over $50 million in revenues in 2000, should be accretive to FreeMarkets’ revenues and gross margins in 2001, and accretive to revenues, gross margins, and operating earnings per share (excluding stock-based expenses and goodwill) in 2002.

The transaction, which is structured as a stock-for-stock merger and a purchase for accounting purposes, has been unanimously approved by both companies’ boards of directors, and is subject to approval by the stockholders of both companies and to customary closing conditions.

Holders of approximately 70 percent of Adexa’s shares have signed agreements to vote in favour of the transaction. At closing, which is expected to occur during the second quarter of 2001, Adexa will become a wholly-owned subsidiary of FreeMarkets.

The combined company will offer customers the ability to identify, select and collaborate with trading partners in their own private marketplaces, with exchanges, or through the FreeMarkets B2B Global Marketplace.

The FreeMarkets B2B Global Marketplace enables buying organizations to source products from more than 165 supply verticals. More than 9,300 suppliers from over 55 countries have participated in the FreeMarkets B2B Global Marketplace. The Company also operates FreeMarkets Asset Exchange, a B2B Global Marketplace for surplus assets and inventory.

According to a recent report by Forrester Research, purchasing executives plan to buy almost 50 percent of their direct materials online by 2002. And the same percentage of manufacturers expect to use an online marketplace solution to optimise production schedules with suppliers.

Additionally, AMR Research forecasts that the market for traditional supply chain planning management software will reach $9.5 billion by 2002, and Information Week expects the market for collaborative commerce applications to exceed $6 billion in the same period.

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