M&A

Blue Monday? IBM to Buy Cognos for $5 Billion

Acquisitive Cognos itself will be gobbled up as the software consolidation spree continues.
Stephen TaubNovember 12, 2007

IBM Corp. agreed to acquire Ottawa-based Cognos Inc. for about $5 billion in cash, marking another major consolidation step in the business software market.

The acquisition, expected to close in next year’s first quarter, would be IBM’s twenty-third since it launched its Information on Demand strategy back in February 16, 2006.

IBM said the deal would combine Cognos’ products with IBM’s consulting services, hardware, and other middleware products.

In a joint press release, the two companies asserted that the combined company will become the leading provider of technology and services for business intelligence (BI) and performance management.

Cognos specializes in BI and performance management products, and claims to help corporate customers plan, understand and manage financial and operational performance. It says it serves more than 25,000 customers.

The deal would be the latest in a long wave of software transactions—led recently by SAP’s $6.8 billion planned purchase of Paris-based Business Objects and Oracle Corp.’s acquisition of Hyperion Solutions for $3.3 billion. In September, Cognos itself made the latest in a number of acquisitions, buying Applix Inc. At the time, Cognos said it was still in the market to buy other companies.

“Customers are demanding complete solutions, not piece parts, to enable real-time decision making,” said Steve Mills, senior vice president and group executive, IBM Software Group. “IBM has been providing business intelligence solutions for decades. Our broad set of capabilities–from data warehousing to information integration and analytics–together with Cognos, position us well for the changing business iIntelligence and performance management industry.

The two companies pointed out that they have partnered for more than 15 years, with extensive technical integrations and eight pre-integrated joint deals already supporting many joint customers, such as New York City Police Department, Blue Cross and Blue Shield of Tennessee, Canadian Tire, MetLife, and Bayer UK.

“With Cognos, customers can turn data into actionable insight for coordinated, information-driven decision-making to improve overall performance,” the companies assert in their announcement. “Cognos will also extend IBM’s reach further into the CFO office with powerful financial planning and consolidation capabilities.”

After completing the acquisition, IBM intends to integrate Cognos as a group within IBM’s Information Management Software division, focused on BI and performance management. IBM also will appoint current Cognos president and CEO Rob Ashe to lead the group, reporting directly to general manager Ambuj Goyal.

Earlier acquisitions under IBM’s Information on Demand initiative include Princeton Softech (data archiving and compliance), FileNet (enterprise content management), Ascential Software (information integration), DataMirror (changed data capture), SRD (entity analytics), Trigo (product information management), DWL (customer information management) and Alphablox (analytics).

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