Due to the combined effects of the previous acquisition of Hyperion by Oracle (NYSE:ORCL) and the pending acquisition of Business Objects (BOBJ) by SAP (NYSE:SAP), Cognos (COGN) becomes the last major stand-alone player in the business intelligence market.
Clearly, the stock price tells you the market is anticipating a potential bidding war. But it also suggests that there is value in being an independent player. Some comments from the Street:
Jefferies & Co.’s Robert Schwartz writes Monday that the most obvious suitors for Cognos would be IBM (NYSE:IBM), Hewlett-Packard (NYSE:HPQ) and “possibly” Microsoft (NASDAQ:MSFT). He notes that Business Objects is selling for 16x enterprise value/free cash flow; on that basis, Cognos would sell for $52. Meanwhile, Schwartz says, Cognos will “make hay” of its position as the last major independent in the sector. Mark Muprhy, of Broadpoint Capital, agrees that the deal enhances the near-term business potential for Cognos. Murphy thinks the company could be worth $57-$65 in a takeover. Jason Maynard, an analyst with Credit Suisse, speculates that IBM or HP were likely involved in the bidding process on Business Objects. Maynard names Cognos and BEA (BEAS) as other potential targets, and potentially Informatica (NASDAQ:INFA), as well. Abhey Lamba, an analyst with UBS, says COGN could be valued in the mid-to-high 50s to an acquirer. Brent Williams, an analyst with Benchmark Co., says other smaller business intelligence players who also could be targeted include Actuate (NASDAQ:ACTU), MicoStrategy (NASDAQ:MSTR) and SPSS (SPSS).
COGN 1-yr chart: