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Descartes Infodis deal minor, but can build AsiaPac business, says Shuttleworth

M Partners analyst Ron Shuttleworth believes the Infodis acquisition is an inexpensive way for Descartes to improve its Asia Pacific presence, a place where it has almost no footprint.

M Partners analyst Ron Shuttleworth believes the Infodis acquisition is an inexpensive way for Descartes to improve its Asia Pacific presence, a place where it has almost no footprint.
Descartes Systems Group (TSX:DSG) yesterday announced it had struck a deal to acquire Infodis BV, a Netherlands-based provider of transportation management software. Descartes will pay three million euros (approximately US $3.7-million) for the company.

Management says that “more than 200 carriers in Europe and Asia and some of the world’s leading high-tech companies will be connected to Descartes’s logistics technology platform, where more than 35,000 trading partners connect and collaborate to improve logistics operations. ”

M Partners analyst Ron Shuttleworth says that considering Descartes had nearly $70-million in cash at the end of Q1, 2013, this is a relatively minor “tuck-under”acquisition. The M Partners analyst does, however, believe the deal is an inexpensive way for Descartes to add Asia Pacific customers, a place where it has almost no footprint. In a research update to clients today, Shuttleworth maintained his BUY recommendation and our twelve-month share price target of $12.00 on Descartes.

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After nearly becoming a dot-bomb casualty, former Gartner analyst Art Mesher rescued Descartes, which he estimated was days away from folding. The company has since become a leader in global logistics technology; solutions that help its customers make and receive shipments.

Descartes now finds itself at the cutting edge of a trend; across the globe governments are looking to untangle and standardize their logistics operations. An increasing amount of evidence suggests a clear link between logistics performance and economics growth. The World Bank’s Logistics Performance Index showed that low and middle income countries such as Brazil and Columbia have given their economies a shot in the arm through improved logistics, while other emerging economies, such as Turkey, have been hurt by a lack of logistics infrastructure.

Descartes revenue, meanwhile, has grown from $66-million in fiscal 2009 to nearly $114-million in 2012.

Shuttleworth says that of Infodis’ 250 customers, the majority do business on European and Asia Pacific trade routes. With only 6% of its business from Asia Pacific, the M Partners analyst believes Descartes can use the deal as a foothold to build a bigger presence in the area.

Shares of Descartes Systems Group on the TSX closed today up .4% to $8.25.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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