Supply chain tech consolidation continues with iTradeNetwork-Amphire agreement


PLEASANTON Calif. In the third major supply chain technology industry acquisition or merger in little more than a year, iTradeNetwork, based here, and Amphire Solutions Inc. said they will join forces to create a global operation serving U.S. restaurant companies and suppliers at home and abroad.

Financial details of the pending transaction between iTradeNetwork, or ITN, and Redwood City, Calif.-based Amphire were not disclosed.

"As the food industry finds itself increasingly under pressure from soaring fuel prices and food inflation, more customers will rely on technology to help improve their operations and reduce costs. We believe this is an excellent time to merge our businesses and leverage the resources of both companies," Amphire chief executive and president Mark Barnekow said of one of the impetuses for the deal.

Recent Amphire activity and much of that company's appeal to leadership at ITN was "largely driven by operator expansion overseas" and the desire of manufacturers and distributors to serve those growing chains, said Barnekow. His company in August 2007 bought Makella, the supply chain software-as-a-service arm of Bidvest Foodservice Group, the United Kingdom's largest hospitatilty distributor. In 2005 it acquired some of the technology and clientele of Tibersoft Corp. of Westborough, Mass.

Word of the iTradeNetwork-Amphire Solutions definitive agreement to merge came less than five months after ITN acquired Instill Corp. of San Mateo, Calif.

The recent series of iTradeNetwork acquisitions or mergers was aided in large part by the December 2007 acquisition of controlling interest in ITN by private equity investor Accel-KKR of Menlo Park, Calif. Accel-KKR, with a focus on technology companies, is a joint venture of Accel Partners and Kohlberg Kravis Roberts.

Following completion of the merger, iTradeNetwork founder and chief executive Robert Bonavito will be CEO of the combined organization. Barnekow will serve as president of international operations, with responsibility for global marketing, strategy and merger and acquisitions.

Astatement by the two companies said both would retain their senior management teams. Separately, Barnekow said that in the interest of efficient deployment of marketing capital all the merged or acquired entities will soon be known simply as iTradeNetwork.

Prior to the acquisitions, the entities now, or soon to be under the iTradeNetwork banner, had carved out definable niches for themselves, while competing in some areas. Combined, they generate about $80 million in annual revenue and support more than $150 billion in transactions a year, company sources and past public disclosures indicated.

Perhaps best known among the operator community, 15-year-old Instill helps supply chain partners share information and its analytical software works with purchasing data to generate so-called "spend intelligence." Its clientele includes Yum! Brands Inc., Darden Restaurants Inc., Subway franchisees' Independent Purchasing Cooperative, Hardee's and International Dairy Queen Inc.

Founded in 1999, iTradeNetwork's proprietary technology consists of "on-demand, e-business" software and services supporting, among other functions, order management, logistics, contract and rebate administration and promotional planning. ITN said prior to its merger activities that its more than 4,800 trading partners and customers included 16 of the top 20 North American food retailers, leading foodservice supply companies and some operators, including contract feeder Sodexo, distributors PRO*ACT and Sysco and manufacturers Cargill Inc. and Tyson.

Barnekow said Amphire, in business since 1999, has worked to create the means for distributors to better serve operators and efficiently deal with manufacturers, primarily through private-label e-commerce "storefronts." Those systems reportedly process more than a million transactions monthly on behalf of 170 distributors, 700 manufacturers and 110,000 restaurant, hospitality and institutional operators worldwide. According to the Amphire executive, the company's operator users range from "moms-and-pops to 6,500 Burger King [outlets] nationally and in the United Kingdom."

"The three biggest players have come together," Barnekow said of the iTradeNetwork-Amphire-Instill union. "The depth of [supply chain] technology this merger brings with it — I don't think there is anyone in any business that has more."

ITN chief executive Bonavito described the merger as "a substantial value creation opportunity for our customers." He said "benefits" from the consolidation will include "a next generation procurement platform" for foodservice and other industries; a base of more than 5,500 manufacturers and suppliers; an established European business as well as additional U.S. users; and "the ability to provide a single point of connectivity" for all customers.