(Bloomberg) — Software provider Kinaxis Inc. surged to a record high as it completed a deal for Rubikloud Technologies Inc. to boost its artificial intelligence capabilities.
Ottawa-based Kinaxis, whose clients include Unilever NV and Lockheed Martin Corp., briefly passed $4 billion in market value for the first time Thursday amid a broad rally in Canadian technology stocks. The firm sells products that help companies manage supply chains, sales and operations.
Its 103% rise this year makes it the fourth-best performing stock on the S&P/TSX Composite Index. The Covid-19 crisis has helped the business as global supply chains have been disrupted: Kinaxis has seen a 20% increase in user activity since January, Chief Executive Officer John Sicard said in an interview.
“There’s never been a time where we’re more relevant, and especially under this particular crisis where all supply chains are experiencing a tremendous amount of volatility and disruption,” Sicard said, describing his company as “Canada’s best-kept secret.”
The firm seized on Rubikloud to fill a gap in its product lineup. The target company, co-founded in 2013 by Kerry Liu, serves the enterprise retail industry, which Kinaxis did not.
“Retail is not a vertical they’re currently in, but one that obviously, if you want to be a global leader in supply chain, you can’t ignore,” Liu said.
The Toronto startup has also made more advances in artificial intelligence and machine learning than Kinaxis has, Sicard said. These include helping clients predict the demand for an item so that they can determine appropriate pricing, according to Liu.
The $60 million cash deal, announced June 15, had been in the making for a few months. Although the two companies had known each other for years, it was only earlier this year when talks started to heat up. At a dinner at Sicard’s home in Kanata, an Ottawa suburb, the two men found themselves “nearly finishing each other’s sentences,” Sicard said.
Soon after, they decided to join forces.
“In the world of acquisitions you usually find out it’s someone south of the border buying up Canadian technology. It’s not as common to see a Canadian company creating a union with another Canadian company,” he added.
Liu will lead strategic innovation at the company. “I see myself continuing to be an evangelist in the space,” he said. “I think it’s as much about understanding and making sure that I’m a subject matter expert where available and then working closely on figuring out what do we need to do in the supply chain together now in this new world.”
Rubikloud is Kinaxis’s second acquisition since going public in 2014. In February, it bought Indian firm Prana Consulting Services Pvt. Ltd. for an undisclosed sum.
The stock is well-liked by analysts with 10 buy ratings, two hold recommendations and no sells, according to data compiled by Bloomberg.
(Adds more CEO comments in tenth paragraph and analyst data in last paragraph.)
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