Lawson's Notice to Note Holders

Lawson Software Inc. ( ) issued a notice to the holders of its 2.50% Senior Convertible Notes due 2012 informing them about a Fundamental Change under the Indenture governing the notes and also notifying that the notes will be convertible at the option of the holders.

Lawson stated that the option can be exercised from the day following the effective date of the merger with GGC Software Holdings Inc., an affiliate of Golden Gate Capital and Infor and will remain open till the day preceding the Fundamental Change Repurchase Date. This period will be of minimum 20 days.

Management expects that Lawson will be acquired by GGC Software on or after July 1, 2011. The merger is contingent upon the approval of Lawson's stockholders. Further, the company’s board of directors unanimously voted in the favor of the transaction.

In late April, Lawson signed a definitive agreement to be acquired by GGC Software for about $2 billion. Under the terms of the merger agreement, Lawson will receive $11.25 per share in cash.

The company had hired Barclays Capital, a division of Barclays PLC ( BCS - Snapshot Report ) , primarily to explore strategic alternatives, and also planned to retain the latter as its financial advisor to assist in evaluating the proposal, as well as other possible strategic alternatives.

Lawson Software competes primarily in two verticals – health care and retail – which are among the fastest-growing segments of the enterprise resource planning market. Lawson operates in a highly competitive market dominated by large players such as Oracle Corporation ( ORCL - Analyst Report ) and SAP AG ( SAP - Analyst Report ) in health care, and JDASoftware ( ) , SAP and others in retail.

We currently maintain a Neutral recommendation on the stock supported by a Zacks #3 Rank.