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Why Lectra Plans to Acquire Rival Gerber for $362 Million

Lectra, a developer of software, technologies and services designed to help fashion, automotive and furniture brands design, manufacture and market their products, is acquiring U.S.-based rival Gerber Technology for approximately 300 million euros ($361.8 million).

The acquisition would allow the French firm, which has recently been investing in solutions to cater to today’s on-demand-driven, “see now, buy now” shopper, to complement its market position and continue to enhance its offerings based on “Industry 4.0” technologies including Internet of Things (IoT) and cloud computing, and other automation and data exchange in manufacturing technologies.

Lectra, which develops computer-aided design (CAD) and computer-aided manufacturing (CAM) cutting systems for soft materials such as leather and textiles, invests 12 percent of its sales back into R&D, it said.

Specifically, the combination of Gerber Technology and Lectra could better address changing customer needs and deliver even greater value through integrated solutions. Both software companies emphasize the need to facilitate “digital transformation” for their respective industries, particularly in the wake of the Covid-19 pandemic as customers seek digital alternatives to manufacturing, product development and design technologies.

Integrating the technology of Lectra and Gerber would endow the combined entite with the resources to anticipate and address rapidly changing market conditions that have been accelerated by the pandemic, they said. Together, the two companies will have a large installed base of product development software and automated cutting solutions in operation.

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Fashion product development and cutting technology firm Lectra proposed a deal to acquire rival Gerber Technology for about $362 million.
Lectra Kubiklinx. Courtesy

Lectra’s fashion solution suite already includes ready-to-wear, personalized textile production platform Fashion On Demand by Lectra, as well as design-to-pre-production modular software Kaledo, pattern making software Modaris and cloud applications Quick Estimate and Quick Nest.

Now, they will have Gerber’s full suite of software, which includes development and pre-production platforms such as AccuMark, AccuNest, AccuPlan, ComposiNest and YuniquePLM among others. Automated cutting solutions within the Gerber Technology ecosystem include Gerbercutters, Gerber MCT Cutter, EnVision and GS Plus Series.

The deal comes a few days after Lectra announced its partnership with Microsoft, which it has been collaborating with since 2015, when the company chose the Azure cloud computing platform for the development for some of its solutions.

Lectra has used Azure for Kubix Link, its collaborative product information management platform specifically designed for the fashion industry. The on-demand technology platform highlighted the potential of Kubix Link as a platform designed to help brands and retailers “reinvent teamwork,” by connecting all internal and external stakeholders, from ideation to physical and digital points of sale. With Microsoft Azure now storing the data from Kubix Link, Lectra is aiming for its users to make the most of their product data and processes and create a unique omnichannel experience for consumers.

The Lectra-Microsoft partnership announcement stipulates a collaborative approach to their customers in the fashion industry in France and Italy, as well as internationally.

With Gerber Technology under its umbrella, Lectra is aiming to boost the productivity and profitability of its customers’ operations and give the combined company a much larger global reach in terms of global customer service capabilities.

Daniel Harari would continue to be the chairman and CEO of Lectra. Gerber Technology CEO Mohit Uberoi will assume the role of Harari’s special advisor until end of 2021.

Inside Lectra's Bordeaux facilities.
Inside Lectra’s Bordeaux facilities. Courtesy

Completion of the acquisition is subject to merger control clearance and other customary conditions and is still being submitted to Lectra shareholders for approval.

Based in Paris, France, Lectra has 34 subsidiaries across the globe, serving customers in over 100 countries. With close to 1,800 employees, Lectra reported revenues of 280 million euros ($337.3 million) in 2019. Gerber Technology’s revenue was 165 million euros ($198.9 million) in 2020. Lectra expects the transaction to be accretive for shareholders by 2022.

Under the proposed deal, Lectra would acquire all outstanding shares of Gerber Technology on a cash-free, debt-free basis, paying 175 million euros ($210.8 million) upfront through a combination of cash and debt, in addition to 5 million newly issued Lectra shares to AIPCF VI LG Funding, LP (AIPCF VI LG), an affiliate of American Industrial Partners, Gerber Technology’s sole shareholder.

Upon closing, Harari would own 14.6 percent of Lectra shares and AIPCF VI LG would own 13.3 percent.