IBM to Pay $5B for Cognos

IBM said Monday it has agreed to acquire Canadian business intelligence software developer Cognos for $58/share, or about $4.9 billion, a 9.5% premium to its Friday close of $52.98. "Customers are demanding complete solutions, not piece parts, to enable real-time decision making," said Steve Mills, IBM senior VP. The acquisition, IBM said, fits within its strategy to combine information integration, content and data management and business consulting services. The deal ends recent speculation as to who would buy Cognos, the last remaining large, pure business-software company, after SAP agreed to buy Business Objects in October and Oracle bought Hyperion Solutions earlier this year. All three firms make software that analyzes vast amounts of data to help businesses make more intelligent decisions. IBM will incorporate Cognos into its Information Management Software division; the unit will be headed by Cognos CEO Rob Ashe. While software is still the smallest of IBM's three main businesses, it is also the biggest profit driver. IBM shares are up 0.2% Monday. Shares of Cognos are up 7.6% to $57.

Sources: Wall Street Journal, Reuters
Commentary: Cognos CEO Gains Insight From New Market • Cognos: Virgin 'Middleware' Territory • Cognos' Missing Enterprise 3.0 Strategy
Stocks to watch: IBM, COGN. Competitors: ORCL, SAP. ETFs: SWH, PSJ
Earnings call transcript: Cognos F2Q08 (Qtr End 8/31/07), International Business Machines Q3 2007

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