WiseTech Global’s announcement to buy the US software firm E2open for $2.1 billion came with headlines about big premiums and immediate stock gains. But behind these headlines is a clear, methodical process companies use to figure out what to pay and how to close deals.
At first glance, WiseTech paying $3.30 per share—28% higher than E2open’s stock price before the announcement—might look generous. Why offer that much more than what investors thought E2open was worth just days earlier? The answer lies in how companies actually approach acquisitions and the balance of negotiating power between both parties.
When one company decides to acquire another, they don’t just consider the current share price. They’re looking at future potential: new customers, higher revenues, and strategic advantages. WiseTech considered E2open’s 5,600 customers and more than $600 million in annual revenue. But the real prize is E2open’s technology. WiseTech wants to integrate its own logistics software with E2open’s supply-chain tools, creating an end-to-end solution covering everything from order placement to final delivery. This ability to offer a seamless platform gives WiseTech a stronger position in the market and potentially higher profits down the road.
Negotiating a price must obviously depend on buyer and seller coming to an agreement. E2open naturally aimed for the highest possible offer, while WiseTech’s team—advised by investment banks like Bank of America, Macquarie, and Barrenjoey—worked to ensure the final number would still create long-term value for their own shareholders. They couldn’t just buy the entire company without E2open agreeing, which means the seller has a kind of built-in bargaining power whose dollar value was relative to the valuation that advisers could create. In other words, the bankers needed to make the numbers work, management needed to still have confidence the deal was worth their while, and in this process the actual share price was more of a historical marker than a guiding principle. That’s why these negotiations are rarely straightforward. Offers, counteroffers, and detailed reviews of financial data help both sides reach a price that accurately reflects the acquired company’s potential.
WiseTech’s decision to finance the acquisition entirely through new debt—a $3 billion facility from several major global banks—also makes sense in the current environment. Debt financing is often attractive because interest payments are tax-deductible, and using debt avoids diluting current shareholders’ equity. Provided the company’s growth outpaces the cost of debt, borrowing is often a smart way to fund large deals. Bankers’ job in this transaction was to find a way to make the cost of the acquisition make sense—not just the price of the company they’re buying, but the cost of capital used to pay that price. This second level consideration is abstract and complicated, and it’s here where finance becomes intellectually taxing and rewarding.
This acquisition also helps WiseTech shift the narrative away from recent turbulence around its leadership. Founder Richard White stepping into an executive chairman role coincided with controversies that rattled investor confidence and share price stability. Making a decisive and strategic move now demonstrates clear direction and strengthens market confidence.
In short, big acquisitions aren’t just about paying a premium over yesterday’s share price. They involve extensive valuation, strategic calculation, negotiation, and smart financing. WiseTech’s deal for E2open is a clear example of how careful analysis and thoughtful execution come together in billion-dollar decisions.
