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EPICOR SPINS OFF RETAIL SOLUTIONS Featured

Joseph Cowan, Epicor SoftwareEpicor Software has spun off its Retail Solutions division effective June 1. For the moment, the company is named Spinco—a new partnership of investors, but remains under the same ownership funds advised by Apax Partners as all the assets were transferred to the same parent that owns Epicor. Information about the retail business remains on the Epicor website, but I assume that will change when the company receives a real name.

The action partially undoes the merger of the former Activant Systems and Epicor Software in 2011 after it went private via the Apax purchase. Retail Solutions had $133.8 million in revenue for the year ended September 30, down 6 percent from the prior year. Its contribution margin for 2014 was $39.4 million, off 9 percent from 2013. The spinoff leaves the company with the Retail Distribution operation that was part of Activant and Epicor's ERP business. The action suggests no one would buy the whole company. However, with Epicor putting both Retail Distribution and the financial software business under EVP Craig McCollum, the rest of the company will likely remain intact. The assumption has been Epicor would be sold after Pervez Qureshi was abruptly replaced as CEO by Joseph Cowan in early fall 2013. Cowan's resume shows his career has been one of selling companies within about two years of his taking CEO jobs. Concurrent with the creation of Spinco, Epicor and its parent, EGL Holdco, secured a $1.4-billion-term loan that was used to prepay debt and distribute a dividend to shareholders. As the Apax purchase of Activant and Epicor in 2011 was a $2 billion deal, I'm thinking $1.4 billion is somewhere around the value of the remaining Epicor business.

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