Coupa Software Snaps Up LLamasoft For $1.5B; Analyst Sticks To Buy

Coupa Software Inc. has snapped up supply chain software company LLamasoft for about $1.5 billion to enhance its product offerings as businesses are suffering from pandemic-led disruptions.

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The acquisition will strengthen Coupa Software’s (COUP), supply chain capabilities and offer customers better business spend management products, the payment software solutions provider said. LLamasoft has developed an AI-powered cloud platform that helps companies to make smarter and faster supply chain decisions. Its software technology is already being used by companies, including Boeing, Danone, Home Depot, and Nestle.

Coupa’s software products are cloud-based systems designed to make it easy for customers to view and control their business expenditures and invoices in real time. The acquisition comes as pandemic-led restrictions are leading to supply chain disruptions forcing companies to work more rapidly to adapt to changing consumer preferences, economic conditions, and the political landscape.

The cloud-based software company said that with demand uncertainty on one hand, and supply volatility on the other, companies are in need of supply chain technology that can help them assess alternatives and balance trade-offs to achieve desired business results.

“We are witnessing an unprecedented shift in what businesses are demanding to effectively manage their supply chains. They need instant visibility, agile planning capabilities, and timely risk mitigation support,” said Coupa CEO Rob Bernshteyn. “LLamasoft’s deep supply chain expertise and sophisticated data science and modeling capabilities, combined with the roughly $2 trillion of cumulative transactional spend data we have in Coupa, will empower businesses with the intelligence needed to pivot on a dime.”

“Together, we will deliver a more powerful Business Spend Management platform to help organizations everywhere maximize the value of every dollar they spend in a smarter, simpler, and safer way,” Bernshteyn added.

However, shares dropped 7.6% on Monday as Coupa announced a proposed underwritten public offering of 2,149,008 shares of its common stock by selling shareholders. All of the shares are being offered by existing stockholders and Coupa will not receive any of the proceeds from the offering, the company said. The sell-off comes as the stock has already provided investors with a 69% gain this year. (See Coupa stock analysis on TipRanks).

Following the deal news, Raymond James analyst Brian Peterson reiterated a Buy rating on the stock with a $300 price target, saying that “similar to Coupa, Llamasoft markets a high ROI ($15B in cumulative customer savings) for its AI-based planning software that targets better management and visibility around supply chain spending.”

“Llamasoft’s board and management team are comprised of several industry veterans across leading supply chain software companies like IBM, Manhattan Associates, and Blue Yonder (formerly JDA Software),” Peterson wrote in a note to investors. “Coupa is paying a combination of cash and stock (~50%/50%) for Llamasoft.”

Currently, the Street has a cautiously optimistic outlook on the stock, with a Moderate Buy analyst consensus showing 10 Buys versus 7 Holds. Meanwhile, the average analyst price target of $295.80 indicates investors could be benefiting from another 20% upside from current levels.