Kronos Inc., providers of workforce management solutions, announced on Tuesday a multi-million dollar deal to purchase Montreal-based workforce planning, scheduling and management solutions provider AD OPT Technologies Inc.
AD OPT's board of directors has unanimously recommended that its shareholder accept the offer worth $6.25 per share or $68,200,000.
Kronos' roots have traditionally been planted in the time and labour side of the workforce management business but it has made significant investments over the last couple of years in employee scheduling, explained Jim Kizielewicz, vice-president of corporate strategy at Chelmsford, Mass.-based Kronos.
When Kronos become aware of AD OPT, it came to the quick realization that the Montreal-based company had been focusing on various vertical markets that Kronos hadn't when it had developed its own solution. Acquiring the company would allow Kronos to expand the number of verticals it could cover in terms of scheduling.
"They have taken a little bit of a different approach in terms of some of the optimization technology that they have developed," Kizielewicz said. "We got interested and said if we put these two things together we will be able to grow the business a lot faster."
There is a very strong cultural fit between the two companies, noted Mark Burton, president and CEO at AD OPT. From its point of view, Burton said the company looks at the acquisition as a positive transaction for the three set of stakeholders that he cares about the most — the shareholders, the employees and the customers.
"For our shareholders we feel that the $6.25 per share price that Kronos has offered is good value to our shareholders and we are supporting the transaction at the board level on that basis. For our employees we see this as a positive transaction [because] Kronos is committed to maintaining our current business lines and they are very excited about the prospects of working with our employees," Burton explained.
In the short term, Burton said that Kronos will continue to sell AD OPT's line of products, while in the long term, he said that Kronos is planning to combine the strengths of both companies' products to make more advanced technology.
For example, Kronos has a product called Workforce Scheduler that it sells to the U.S. health care market and AD OPT has a product called Shift Logic, which includes some unique scheduling optimization capabilities, Kizielewicz explained. "We intend to take advantage of those scheduling engines and add them into the Workforce Scheduler product well at the same time we are continuing to sell Shift Logic."
Another benefit of acquiring the Canadian company is that it gives Kronos access to vertical markets north of the border where, Kizielewicz said, the company hasn't traditionally had much presence. This includes AD OPT's Total Care product, which is sold into the Canadian health care sector, he added.
For now, both companies agreed that all AD OPT locations will remain in Canada and Kizielewicz said that Kronos also plans on expanding the employee base in Montreal.
The transaction is expected to close in Kronos' first fiscal quarter of 2005.