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CDC Software to Acquire 51% of Chinese ERP Provider

CDC Software Corporation (CDCS), a global provider of enterprise software applications and services, today announced, at a press conference in Shanghai, that it has executed a term sheet to acquire up to a 51 percent stake, in three tranches prior to March 31, 2012, in Beijing-based Hejia Software Technology Co. Ltd, a major ERP software provider in China.

The acquisition of this interest in Hejia Software is subject to several customary closing conditions, including the execution of definitive documentation related to the deal, the receipt of all requisite approvals and consents, and the satisfactory completion of due diligence by CDC Software.

Founded in 1998, Hejia Software Technology is a major ERP vendor in the China enterprise market, and currently has offices in Shanghai, Guangzhou, Changzhou, and other places throughout the China region. The company’s main product, HJSOFT, is a web-based solution featuring functionality in supply chain management, ERP, quality assurance, financial management, and customer relationship management. Hejia Software’s products are used by more than 400 customers in industries that include Industrial, Food and Beverage, Healthcare, Publishing and Chemical. Some of Hejia Software’s customers include Changlin Company Limited, Shandong Dong-e E-Jiao Group, Zizhu Pharmaceutical, Coca-Cola, Bosch Rexroth, Novo Nordisk, and Hörmann.

In the event the acquisition is completed, Hejia Software Technology will be the latest addition to CDC Software’s successful Franchise Partner Program and the second franchise partner in China following last year’s previously announced acquisition of a majority stake in Integrated Solutions Ltd. (ISL), a provider of ERP solutions for small and medium-sized discrete manufacturers. Formed in 2006, CDC Software’s Franchise Partner Program helps CDC Software establish strategic relationships with partners in selected geographies, with a focus on emerging markets, through majority control, as well as minority investments. CDC Software currently has seven other franchise partners located in India, China, South America, Spain and Mexico.

The acquisition of Hejia Software Technology is part of CDC Software’s strategic plans to expand its geographic footprint and increase sales by accessing rapidly growing economies. As part of that strategy, CDC Software expects to continue to pursue other strategic investments in China.

If the transaction is completed, Hejia Software is expected to resell CDC Software’s Ross ERP, CDC Supply Chain and CDC Platinum HRM through an OEM partnership in mainland China, and Hejia is also expected to leverage CDC Software’s extensive global infrastructure to expand sales of its own products.

“We are very pleased to invest in Hejia Software, a major ERP software provider in China that fits into our expansion strategy in that country,” said Peter Yip, CEO of CDC Software. “We believe China holds significant growth opportunity for the enterprise software market and that this investment will help us to increase our market penetration in this country. Hejia is also expected to help us accelerate our organic growth rate as Hejia will help sell CDC Software solutions into the China market. Together with other potential investments and partnerships, we hope to see sales in China making up a more significant portion of our revenue in the near future.”

“We are excited about CDC Software’s investment in Hejia Software,” Chen Jia, chairman and CEO of Hejia Software. “CDC Software’s Franchise Partner Program investments and acquisitions have performed well under support from CDC Software’s global infrastructure. Together, we hope to not only help build Hejia Software’s market share, but also further expand CDC Software’s products into this potentially lucrative market.”

This pending acquisition also represents a continuation of CDC Software’s restarted investment program following the completion of its initial public offering on August 6, 2009. Earlier this month, CDC Software completed its previously announced acquisition of Categoric, a supply chain event management software provider.

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