Pinned straw:
$WTC issued a late confirmation this evening that it is engaged in a strategic review of US supply chain and logistics provider E2Open ($ETWO).
While $WTC has confirmed it is looking at E2Open, it is making clear that a transaction might not evenutate.
E2Open is a complementary business to $WTC focused on supply chain planning, demand forecasting, supplier collaboration, and global trade compliance, whereas the Cargowise focus is more on logistics execution—freight forwarding, customs compliance, and transportation. That said, there are areas of overlap.
The timing could be fortuitous from the $WTC perspective. E2Open was pretty acquisitive in 2021 and 2022, and over the last two years has made major goodwill writedowns, as these acquisitions have not delivered the intended value. (Let that be a warning to RW!) See the SP chart below.
As a result, market cap is down from US$3.42bn in late 2021 to US$1.8bn in 2023 to US$611mn yesterday! What a fall from grace! (We might expect a bit of a pop overnight, given news of $WTC's interest.)
Despite the writedowns and forecast continuing NPAT losses - presumably due to continuing goodwill amortisation - E2Open is still valued on a EV/EBITDA of 6.75, with forecast EBIT of US171m, even though revenue growth looks pretty flatlined.
As an acquisition this lies totally within $WTC's current financial capacity, however, it would easily be the largest acquisition to date, with all the risk that entails.
I tasked my AI BA with putting together a "Strategic Rationale" for why $WTC might contemplate such an acquisition. Overall, it makes sense to me. IF they can execute sucessfully.
Still, counting chickens here. There might not even be a deal.
Strategic Rationale for Acquisition ((Prepared by ChatGPT4.0)
1. Expansion Across the Supply Chain
- WiseTech primarily focuses on logistics execution—freight forwarding, customs compliance, and transportation.
- E2open adds capabilities in supply chain planning, demand forecasting, supplier collaboration, and global trade compliance, creating a more end-to-end platform.
- The combination would span planning to execution, a rare full-stack integration in logistics tech.
2. Access to a Broad Customer Base
- E2open serves a wider array of large enterprise manufacturers, retailers, and brand owners.
- WiseTech could cross-sell CargoWise solutions into these accounts while upselling E2open's planning tools to freight forwarders.
3. Global Network Effects
- E2open claims over 400,000 connected partners in its multi-enterprise network.
- WiseTech’s CargoWise system links forwarders and customs brokers in over 165 countries.
- A merger would strengthen data visibility, tracking, and workflow automation across more legs of the global supply chain.
4. Cloud Platform and Architecture Alignment
- Both firms offer multi-tenant, cloud-native software.
- Their platforms are built for scalability and integration, enabling smoother consolidation and unified roadmaps post-acquisition.
5. Undervalued Asset Opportunity
- E2open has seen a sharp decline in valuation due to missed financial targets and goodwill impairments.
- For a disciplined acquirer like WiseTech (which typically buys profitable or strategic assets), this could represent a discounted strategic asset with long-term value.
My Conclusion
I don't know enough about E2Open to have a considered view about the potential combination.
There are some potential orange flags. While the large Blume and Envase landside logistics software deals appear to have progressed well, there have been delays to the launch of Container Optimisation, which presumably integrated some of their capabilities. We've not been given any insights into that, other than RW wanted to move slowly to get things right, starting with a small localised trial implementation.
E2Open is a significantly larger acquistion than anything $WTC has done before, and although $WTC has built a strong capability over the last deacde in successfully acquiring and integrating businesses. E2Open is a step up in scale, and itself includes two material recent acquisitions (Bluejay Solutions and Logistyx Technologies), which were part of E2Open's own growth story and scaling up. No doubt, RW and team are doing their due diligence on what precisely thay might be getting into.
I'm not going to second guess Richard and his management team. They've been pretty sure footed over the last decade in the acquisitions they've made and, when the time comes, they'll lay out the rationale. It will surely be something about accelerating by years the building of the Global Logistics OS. So, let's wait and see what happens, if anything.
However, given E2Opens recent fall from grace and sluggish outlook, the timing could be right to make this move if it brings complementary capabilities AND a large client based into which $WTC can cross-sell Cargowise.
Given $WTC's long term strategic goal, it is hardly surprising that the acquisitions they will consider will grow as they do. At just shy of A$1bn market cap, E2Open is still a minnow compared with $WTC's almost A$19bn!
Disc: I hold WTC in RL only
In the initial years of WTC post listing, I recall there being an acquisition every other month, probably due to the lower reporting materiality threshold then. It did feel like it was buying customers then. As WTC gobbled up more customers, there was a distinct shift to towards buying capability, to accelerate the plugging of solution gaps, either from a pure functionality perspective or to address country-specific compliance requirements. My image of RW then (and now) was that he had a map of the world on the wall, marked it up for white space (pun intended) in terms of logistics technology capability, then started buying companies, big or small, to fill that white space.
I read the announcement and @mikebrisy 's comments from a IT capability perspective.
I had some high-level exposure to e2Open as a customer, probably 4-5 years back (caveat: a generation in the IT software world), so this brought back some fading memories:
- I knew it back then as a supply chain optimisation/production planning tool - from their website, this sounds like the Channel, Planning and Supply Suites.
- Inputs to e2Open included sales demand/forecasts, production plans, inventory stock levels, re-order lead times, inventory turns, e2open would then apply smarts to optimise the supply chains to make everything work, taking out the manual effort to string everything together etc.
- It had a very internal production planning focus (at least how we intended to use it) - the outputs would then feed into the external supply chain in a continuous planning/optimising loop. The more of your external supply chain you had built into your e2Open model, the more effective the planning became as everyone had more visibility of everything.
- It was notoriously difficult to wrap your head around and implement as it really required a team of hard core planning people who sit across an entire organisation and directs traffic/react to issues etc. The less production planning you did, functionally, the harder it was to implement e2Open. Not a reflection of the software necessarily, but rather the fundamental challenges of production planning and supply chain optimisation in any mid-sized organisation
- Don't recall it having the Global Trade and Logistics suites that it has now - this does feel like it overlaps with WTC capabilities.
Fully agree that RW and WTC have had a superb track record of acquisition and integration - no issues with that all. I get rational 2,3 4 of @mikebrisy's BA list, which are highly positive.
But with this experience with e2Open, (with the caveat of this being a narrow and outdated view on what e2Open now does), and with the absence of any detail as to rationale, I am actually right now more cautious than excited on this potential acquisition.
I can’t quite visualise what e2Open will ring to CargoWise/ComplianceWise/Container Transport Optimisation from a pure functionality perspective. There are overlaps but I would expect WTC’s capability to dwarf the e2Open suites in this space.
The "spanning of planning to execution .. full stack integration in logistics tech" sounds good in our world of “big is better”. But “big/full” is not necessarily a good thing in IT. Particularly if the expansion feels like a much larger, and further out, expansion of adjacency, into the customers supply chain operations, rather than of WTC’s core logistics competency. Is this the vehicle to expand WTC’s horizons beyond logistics perhaps? If so, is this a good thing?
Exciting times ahead though, and much better to be focused on these things than RW’s relationship dramas and WTC’s governance issues which the AFR is hell bent on reminding us in every article on WTC!
Discl: Held IRL and in SM
OK. So I need to correct something. $WTC is reportedly considering paying up to USD2.23bn for E2Open. So I didn’t understand its capital structure last night, when I posted. There is a lot of debt supporting the EV.
Capital Structure Overview
- Total Debt: Approximately $1.06 billion.
- Shareholders’ Equity: Around $877 million.(last report)
- Debt-to-Equity Ratio: Approximately 1.21, indicating that the company has $1.21 in debt for every $1 of equity.
- Debt-to-EBITDA Ratio: Approximately 6.46, suggesting a high leverage relative to earnings before interest, taxes, depreciation, and amortization.
Anyway, as expected, SP popped 21% overnight on the news RW and team are sniffing around.
At 1H, $WTC reported having USD380m in cash and undrawn debt, so there would be a lot to find, through further debt, equity, and earn out.
So the comparison would be $WTC’s USD20bn market cap to an acquired EV of USD2.3bn. Hardly a "tuck-in" but still doable.
If we put it in terms of accelerating capability development, $WTC spent $137m last half in R&D, say an annual run rate of $274m. So, acquiring E2Open would be equivalent to 8 years of development spend.
Anyway, I’m getting ahead of myself.
I always saw WTC as buying customers (buying revenue or market entry as you say). The good thing about the WTC rollup over ABC learning and others is as you say it's a global market, not just Australia, so plenty of runway and yes probably years away from saturation albeit you need the acquisitions to bigger and the price to be right to play the PE arbitrage. HSN is similar in terms of being able to go global with a rollup albeit they don't have the high PE multiple form the market to be able to do it as effectively.
You can make a lot of money out of a rollup look at KPG too. Just it's more financial engineering than any secret sauce hence why I don't think Richard White is crucial to the story as long as if anyone did replace him followed the same strategy.
Must Do or Nice to Have?
@Solvetheriddle implied the big question here: is acquiring something like E2Open a must do or just nice to have?
It all comes down to what you believe $WTC’s vision and strategy really are. RW has been uncompromising on this for years—he aims to build the Operating System for Global Logistics. That’s a moonshot ambition, given the sheer size and diversity of the supply chain market and the many types of participants it includes.
I believe acquiring something like E2Open is a must do, because it could shave 5–10 years off achieving that vision. Here’s why—and I’ll refer you to the following chart:
$WTC’s core capability and major revenue today comes from International Freight Forwarding—the centre of the diagram—where it is a global leader and is establishing a dominant position among the top Large Global Freight Forwarders (LGFF), while expanding to regional players as well.
In early 2023, $WTC signalled the next phase of its strategy by moving into landside logistics through its significant investments in Blume and Envase—both leading North American software providers in landside logistics. This shift brings $WTC into a far more fragmented domain, populated by a plethora of logistics software platforms, tools, and process-specific applications.
For the past two years, $WTC has been integrating these capabilities into Cargowise—including other acquisitions like Matchbox and eDocuments—and is now beginning the long process of bringing these new features to market.
This shift also changes $WTC’s customer profile. It’s no longer just serving global freight forwarders, but now more local and regional logistics players—many of whom are not involved in international trade and simply hand off their cargo to the LGFFs.
This is where E2Open comes in.
E2Open is widely used across North America—not just by logistics firms, but also by their customers: the brands and manufacturers. $WTC doesn't really play in this segment. Neo is an attempt to offer customers a view into the Cargowise ecosystem, but it misses the mark. These customers already rely on sophisticated tools from SAP, Oracle, Descartes and others for everything from demand planning to asset booking. Apple, for example, reserves logistics capacity for a new iPhone 6–12 months before launch.
This market is so mature—albeit still fragmented—that $WTC can’t simply code its way into it. It has to enter via acquisition.
Whether E2Open is the right target? I don't know. That’s for RW and his team to determine. But strategically, this type of move is exactly what we should expect from $WTC if it is serious about executing on its long-term vision. It’s a logical next step.
E2Open would complement Blume and Envase well, especially with its North American focus (60% of revenue), and would deepen $WTC’s reach beyond logistics companies to the end customers, and from execution into planning and forecasting.
Even if the deal doesn't proceed, something like this is—in my view—a must do for $WTC to achieve its ambition of building the Operating System for Global Logistics: a platform used by brand owners, manufacturers, logistics firms, retailers, wholesalers, freight forwarders, and customs agents alike.
To @edgescape's point: planning and forecasting tools aren’t optional—they’re essential. The current downturn is just noise. Large firms must make regular decisions across tens of thousands of SKUs, and have used systems to do so for decades. $WTC ultimately wants to offer a fully integrated system, used by every supply chain participant from manufacturer to end customer. It's a massive, long-term goal—and it will take decades to achieve.
On Valuation
@Solvetheriddle e has laid out some relevant metrics suggesting E2Open might be reasonably priced. But there are reports of a purchase value “up to USD 2.23bn”—a hefty 47% premium if accurate. That figure has been attributed to the AFR. Possibly E2Open insiders trying to talk up the price?
What’s more concerning is that E2Open has written down $2 billion in goodwill over the past two years—for a company with a market cap of just USD 744 million. That suggests some seriously poor acquisition decisions and pretty questionable management.
On Customers
E2Open claims “480,000 connected enterprises,” most of them in North America. This is where the strategic customer acquisition comes into play. $WTC would gain access to a dramatically larger customer base than Cargowise has today.
Over time, $WTC could leverage these relationships to migrate more and more supply chain processes onto its platform—driven by the value of seamless integration and “one version of the truth.”
So, it’s not about buying revenue—it’s about buying long-term strategic access to thousands of new customer workflows.
On Timing
$WTC hasn’t even properly launched the Container Optimisation product yet. If I recall correctly, its rollout was descoped to a local pilot in Sydney in 2025.
Eventually, Container Optimisation is intended for North American landside logistics markets. But imagine if E2Open’s customers could simply add Container Optimisation as incremental modules to their existing licence?
As $WTC moves beyond its freight forwarding core into more fragmented and competitive segments, the more tools it can bring to the table, the greater its chance of success.
That said, I am surprised by the speed of this potential move. I would have expected $WTC to complete a successful rollout of its integrated landside logistics suite in North America first—perhaps over the next 12–18 months.
Still, this looks like a continuation of the same strategy $WTC has used successfully for years. The only difference is they’re scaling up—now aiming to extend Cargowise to more of the supply chain and more of its players.
In Conclusion
To understand a potential E2Open deal, you have to consider both the chart mentioned above and $WTC’s long-term vision. From where I sit, this is a bold but necessary move. Even if this deal falls through, I suspect it’s only a matter of time before we see $WTC pursue a similar acquisition.
I have many questions, and what I’ve written above might not be exactly right. But I can’t wait to see if the deal goes ahead—and, if it does, to hear RW’s version of the story.
Disc: Held (RL only)