Analysts see Infor-Koch combo boosting ERP vendor

ERP vendor Infor will become a standalone subsidiary of multinational giant Koch Industries Inc., as a result of an acquisition agreement announced Tuesday. Koch is already a major investor of Infor's ERP systems as well as a large user of them. 

The Infor-Koch announcement has user benefits, according to analysts. First, it removes the uncertainty that came with Infor's planned IPO. Infor will remain privately held. 

Second, Koch's manufacturing experience will help with product development of Infor's ERP systems. Koch is expected to invest heavily in Infor, analysts say.

"In the long run, this will help Infor customers as Koch has deep pockets and is investing for growth," said Ray Wang, principal analyst at Constellation Research in Cupertino, Calif. "If Infor was to go public, the capital markets would punish Infor for any long-term bets and weaken the company in the short run."

Infor said that an affiliate of Koch Equity Development LLC, the investment arm of Koch, reached a deal to acquire the remaining equity stake held by Golden Gate Capital. 

One year ago, Koch Equity and Golden Gate made a $1.5 billion investment in Infor. The total deal was put at about $13 billion, said one person familiar with the agreement. Golden Gate is a private equity firm based in San Francisco.

Koch's business strategy has been to take companies private "and really invest in them," said Trevor White, analyst at Nucleus Research in Boston.