Supply Chain Software M&A: Investor May Take e2open Private, SEC Filing Suggests

Supply chain software provider e2open could go private under a potential buyout proposal from Elliott Investment Management, an SEC filing suggests.

E2open develops cloud-based supply chain management software. Such software is critically important to customers that want to track and report their Scope 3 greenhouse gas (GHG) emissions.

According to the an SEC filing from Elliott Investment Management:

• The investment firm believes e2open's stock is "undervalued and represent an attractive investment opportunity.
• The investment firm will "seek to engage in a dialogue" with e2open's board of directors and/or management about "strategic opportunities to maximize shareholder value."
• Elliott may seek to "participate and potentially engage in, as an acquirer, investor and/or financing source."

e2open, Flexport: Supply Chain Software Businesses Under Pressure

The M&A rumor surfaced a few days after e2open announced weak quarterly results -- which prompted CEO Michael Farlekas to exit the company. Andrew Appel has been named interim CEO.

E2open's total GAAP revenue for the second quarter of fiscal 2024 was $158.5 million, down 1.4% from the year-ago comparable period. Growth-rate pressures will likely persist through the end of fiscal year 2024, CFO Marje Armstrong said in an earnings statement on October 10, 2023.

E2open's stock surged 26% on the M&A rumor, but shares are still down roughly 45% over the past year. The company's valuation is roughly $824 million as of mid-day on October 16, 2023.

Flexport Layoffs: The e2open buyout speculation reinforces continuing pressure on the supply chain software market. Only a few days ago, supply chain software startup Flexport announced 20% staff cuts in a bid to restore profitability by the end of 2024 or so.

e2open Supply Chain Management Software: Business Background

E2open, founded in 2000, is based in Austin, Texas. The company's software allows customers to "anticipate disruptions and predict opportunities to help your business improve efficiency, drive profitability, reduce waste, and operate sustainably," the company asserts.

E2open has a partner program that's designed for alliance partners, value-added resellers (VARs) and referral partners, and strategic partners.

E2open has had multiple ownership models in recent years. Among the dates to note:

• 2012: Launched an IPO.
• 2015: Acquired by private equity firm Insight Venture Partners for $273 million.
• 2021: Went public via a SPAC (special purpose acquisition company) merger.

What's next? We'll be listening to learn if Elliott Investment Management pursues a take-private deal.