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December 4, 2008

i2 Technologies officially announced early this morning that its $346 milllion acquisition by JDA Software Group has been officially terminated.

The news comes a little over three weeks after JDA Software said it wanted to negotiate a lower acquisition price for i2 Technologies.

i2 said JDA wouldn't provide consent to disclose any specific details of discussions between the two parties, but did say it expects to receive a $20 million termination fee on or before Dec. 6.

With the JDA deal now officially cancelled, i2 Tech must now scramble to rapidly revitalize its business or simply find another potential buyer for its business. Now, both may be difficult.

With the economy now in a deep downturn, i2 already is fighting a steep uphill battle just to gain new business.

However, the failed merger greatly adds to its problems, and also even acts as a distraction to its core business.

In a recent research note, JMP Securities said that i2 Technologies and JDA Software had already prepared for a very quick post-closing integration, and that some key i2 executives had already cleaned out their offices and packed their bags.

Other employees had already been informed about whether they were likely to have a continuing role post-merger, or if they would be terminated as well.

JMP Securities said once the merger officially expires it would expect i2 to make several additional cost cuts and restart the strategic sale process all over again.

i2 has previously disclosed it received two other competing offers to acquire the company in addition to JDA's. But any offer will be nowhere near JDA's $14.86 a share offer.

Shares of i2 were trading down 17 percent at $6.03 late Thursday afternoon. They traded as high as $14.60 early in March.

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Source: i2 Technologies Inc.