IBM buys Cognos for $4.9bn

Tech titan International Business Machine (IBM) announced on Monday that it will buy Cognos Inc., a leading maker of corporate-analysis software for $4.9 billion, in a move that would strengthen Big Blue’s position in the business intelligence (BI) software industry.

Ottawa-based public company Cognos is Canada's biggest software maker that makes business intelligence software and provides tools for building business reports and business performance management dashboards.

IBM's latest move marks its 23rd acquisition since February 2006. Cognos would compliment IBM’s software portfolio of data warehousing and information management, and would help company compete with Oracle Corp. and German software giant SAP AG in providing software that tracks corporate performance.

IBM, the world's top provider of computer products and services, will pay $58 a share in cash for Cognos, or 9.5 percent more than the closing price of $53 per share on Friday (Nov. 9).

"IBM has been providing Business Intelligence solutions for decades," said IBM Senior Vice President Steve Mills. "Our broad set of capabilities--from data warehousing to information integration and analytics--together with Cognos, position us well for the changing Business Intelligence and Performance Management industry."

After the acquisition, IBM will integrate Cognos with its Information Management Software division, Mills said. Cognos' employees and management staff will remain in Ottawa, and Cognos President and Chief Executive Officer Rob Ashe will take a position within IBM's Software division, he added. Cognos employs more than 3,500 workers.

The all-cash acquisition deal, which still requires the necessary approval of Cognos shareholders, is expected to close in the second quarter of 2008. The shareholders will vote on the deal at a special meeting. For the merger approval, two-thirds of the votes cast must favor the transaction.

Last month, SAP, the world's largest maker of business software, announced deal to buy business-intelligence specialist Business Objects of Paris for $7 billion. Before this, in April, Oracle acquired Hyperion Solutions, another business intelligence company, for $3.3 billion.

Armonk, N.Y.-based IBM’s Cognos takeover has accelerated the long-simmering rivalry among the top BI titans, like Business Objects, Hyperion, Cognos, Teradata TDC, Informatica, MicroStrategy, SPSS and Actuate, who are struggling to snap up monster share in the increasingly surging $23billion market of business intelligence.

Founded in 1969, Cognos is the world's second-largest maker of business- intelligence software, ahead of Hyperion, with net income of $115.7 million on an 11.6% increase in sales to $979.3 million (as of Feb, 2007). Initially working as a computer consultant to Canada's government, the company later shifted its focus to business intelligence in the 1980s. Cognos predicted that sales would rise as much as 12% to $1.1 billion in fiscal 2008.

Shares of Cognos climbed $4.17, or 7.9%, to $57.15 on the NASDAQ Stock Market, while shares of IBM jumped $1.24, or 1.2%, to $101.49 at 4 p.m. in New York Stock Exchange trading.