Cognos/IBM Merger: Further Software Consolidation

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Includes: COGN, IBM
by: Paul Kedrosky

With IBM (NYSE:IBM) announcing it bought Ottawa-based business analytics company Cognos (COGN) for $5-billion, or 5x trailing revenues, software consolidation continues apace.

A deal had been rumored for some time, and when tech was busy being wrecked last week that Cognos ended the week up 7.7%, quite a performance when the rest of tech was down by 10% or more.

I like the deal, and it makes lots of sense -- even if Cognos shareholders aren't getting a big premium over Friday's close -- but the stock sure did act like a lot of people knew something in recent weeks.

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As a related aside, if you're looking for other speculative Canadian software buyout candidates, Open Text is a possibility. Lots of chatter about it possibly going to Oracle (NASDAQ:ORCL).

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Quiz question: Name three other bigger-cap tech stocks that ended last week on the up side.