Database software maker Oracle Corp. is buying business performance management solutions maker Hyperion Solutions Corp. for $3.3 billion, a move which puts competitors such as local company Cognos in an interesting position.
Oracle, which has a market value of more than $80 billion, will pay $52 in cash for each share of Santa Clara, Calif.-based Hyperion.
Hyperion's stock closed on Wednesday for $42.84.
Cognos was upbeat on the news of the acquisition and said in a statement that the deal would help strengthen its position in the market, since it would be removing a major player from the competition.
"Customers have heterogeneous databases and application environments and require their performance management from a database- and enterprise resource planning (ERP)-independent vendor," the company said. "Cognos is clearly now their number-one choice, and we remain laser-focused on bringing that value of our independence to our customers."
The company emphasized the advantage of its specializing in a single performance management solution, and dismissed Oracle's product offerings as having too much overlap.
"Cognos offers a single performance management vision and an integrated solution, in stark contrast to Oracle's substantial product overlap and conflicting product vision," the company's statement noted.
Cognos's vice-president of market strategy and strategic communications Mychelle Mollot said the acquisition of Hyperion meant Cognos is now the leading independent performance management solution, which is important to allow customers to seamlessly plug into applications from different environments and operating systems.
"Customers will have data sitting in Hewlett-Packard, SAP, Oracle, and Microsoft, but Oracle is focused on optimizing its own environment and what it owns, which means that it will be difficult for Oracle to get access to those other environments (to effectively manage performance," Ms. Mollot explained. "(As an independent performance management solution provider) we're not locked into one stack, and we can plug into applications regardless of who it comes from... We're the Switzerland of performance management."
She added that the move means customers will be questioning where Oracle will be placing its next investment, since the company currently owns many different business intelligence solutions, which often overlap.
"Customers are going to be looking at which solution's going to be the go-forward technology," she said.
Meanwhile, analysts were also positive on the effect that the acquisition would have on Cognos, with Wedbush Morgan upgrading Cognos's stock from "hold" to "buy" with a $43 price target.
"We believe that the company could benefit from Oracle's acquisition of Hyperion as business disruption stemming from that takeover could cause potential deals to spill over in Cognos's favour," said Wedbush Morgan analyst Michael Nemeroff. "As well, takeover speculation that Cognos will be bought could also push the stock higher over the next few months."
According to a Reuters report, some analysts are saying that the deal could provoke Oracle's rivals IBM and SAP to bid on Cognos and France-based business intelligence software company Business Objects.
At 3:18 p.m., shares of Cognos rose by $1.18 to $39.29.
