Private equity firm Apax Partners plans to acquire business-application makers Epicor Software and Activant Solutions and combine them into a single mid-market company with annual revenue of $825 million.

The companies announced the deal Monday, launching the latest merger attempt among vendors providing enterprise resource planning systems. Lawson Software said last month that it had received an unsolicited bid from rival Infor.

Apax said the combined purchases of Epicor and Activant is valued at $2 billion. If the acquisitions are successful, Apax will own a mid-market company with more than 30,000 customers and $825 million in annual revenue.

Epicor provides ERP software for manufacturers, while Activant focuses on retailers and wholesale distributors. Apax is paying cash for Activant, a privately held company, and is offering Epicor stockholders $12.50 a share in cash, which is an 11.2% premium over Friday's closing stock prices. The Epicor deal alone is valued at $976 million.

Epicor's board has approved the sale, which awaits the OK from regulators. Under the terms of the deal, Epicor has 30 days to search for a superior proposal before committing to the acquisition. Such a proposal is not expected, and the companies plan on closing the deal by the end of the current quarter.

"With Apax, we are partnering with one of the premier investment firms in the world and one that is very much focused on growth and delivering value to the customers of its portfolio companies," George Klaus, Epicor chief executive and chairman, said in a statement.

Size matters in the ERP business, so the market is seeing attempts at consolidation by mid-market companies to give them more clout with customers against the larger vendors, such as SAP and Oracle. Recent examples include Infor's unsolicited, $1.84 billion bid for Lawson.

In the case of Epicor and Activant, the companies will benefit by combining intellectual property in a single company focused on specific markets, Scott Guinn, an analyst for IDC, said in an interview. "It turns them into a pretty big powerhouse in the manufacturing, retail, and wholesale distribution areas."

An Infor and Lawson combination would create an organization with nearly $3 billion in annual revenue, or more than three times larger than the combined Epicor and Activant. Lawson provides ERP, customer relationship management, and human resource management software. Infor is an ERP, CRM, and lifecycle management company led by Charles Phillips, former co-president at Oracle and an architect of that company's acquisition of business software makers Siebel, JD Edwards and PeopleSoft.

Human resource application vendors have been particularly hot as takeover targets recently. Late last year, Lawson said it would acquire Enwisen for $70 million in cash, and Epicor bought Spectrum Human Resource systems for $16 million cash.

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