Perfect Commerce Offers to Acquire Hubwoo

Hubwoo announced yesterday that Perfect Commerce has made a cash offer to buy all the shares in the Paris-based procure-to-pay software company for €26.6 million (about $30 million). This equates to a share price of €0.19 Euros – a near-36% premium over its last share price. This "bargain basement" purchase price (roughly 1x of trailing revenues) could put the struggling Hubwoo under the control of a parent corporation registered in Luxembourg (even though Perfect is a decidedly US-centric firm).

Spend Matters will follow up on this news with detailed analysis and implications of the deal, but our initial thoughts point to an opportunity for Perfect to expand its customer base, geographic presence and its supplier network capabilities – and also a way to defibrillate Hubwoo, which has been floundering since SAP acquired Hubwoo’s largest competitor Ariba. Perfect also picks up a strong catalog management application and an e-procurement "skin" application called Easy Buy that can be bolted onto SAP ECC or SAP SRM.

Speaking of SAP, the possible acquisition also creates a strange and uncomfortable situation where Perfect, a SAP competitor (in both business networks and now source-to-pay applications), can potentially host the latest SAP contract management and sourcing applications.

Spend Matters Analysts: Around the Horn

Before we compile our collective thoughts into a more cohesive piece of analysis, here are some initial Spend Matters team reactions to the details of the news from beside the water cooler of our virtual global newsroom.

Thomas Kase, vice president of research here at Spend Matters, mentioned he is a bit surprised that it took a firm so long to snatch up Hubwoo. Mainly, Thomas was also quick to point to Hubwoo's mutual courtship with SAP before May 2012, when SAP went with Ariba; after which Hubwoo's share price dropped from €0.19 to €0.11 in May 2012 – although the stock has long been a depressing story for investors (see chart below). So this acquisition announcement may set the stage for potentially rocking the SAP boat even more on several fronts...(yep, we scored three cliches in just one sentence.)

スクリーンショット 2015-06-10 11.46.30

Additionally, an initial look at the financials – especially on the services revenue front – points to what could be some worrisome signs, according to Thomas.

Both Thomas and Xavier Olivera, editor of Spend Matters Mexico y América Latina, agree that Hubwoo offers Perfect a business network, catalog management and shopping system capabilities, which include supplier data integration, other network connections that Hubwoo already has (today, Perfect's network is already connected to Hubwoo's network), data management capabilities and probably some analytic capabilities.

"It is logical to match catalog capabilities, supplier onboarding services and a supplier network with an e-procurement solution – so far it is all good. Let's see if Perfect Commerce can pull this off with Hubwoo, which appears to have deep fundamental issues considering [the company's] unhealthy financials," Thomas added.

And Peter Smith weighed in with a wild card – how Perfect will approach tail spend management, given this new relationship. (Which, by the way, is Spend Matters UK's Hot Topic of the Month.)

Stay tuned as our coverage of this M&A news continues on Spend Matters.

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