Last year saw a 44% increase over 2006 to complete C$370-billion worth of deals, and 1,941 transactions in total, thereby making 2007 a record year for the Canadian M&A market. Some of the country’s largest deals ever, such as the C$51-billion buyout of BCE Inc. (BCE) and a C$40-billion deal for Alcan Inc. (AL), were major contributors, according to the Financial Post Crosbie: Mergers & Acquisitions in Canada report for the fourth quarter of 2007.

There were 60 “mega-deals” or transactions in excess of C$1-billion worth C$275-billion last year, which compares to 51 valued at C$172-billion in 2006.

Dazed and confused. Such is the fate of the thousands of BI customers of Business Objects (BOBJ), Cognos (COGN) and Hyperion as their respective acquirers – SAP (SAP), IBM (IBM) and Oracle (ORCL) - decide how to shape their future product lines.

The European Commission announced Monday that it will conduct an "antitrust probe" into the Cognos (COGN) - IBM (IBM) case, although it has not yet formally extended its review beyond the January 29, 2008 deadline. According to the EC, the companies have not met the "criteria for a simplified probe", within the context of the initial filing, therefore prompting Monday's action.

We continue to anticipate very little real interest from the European Commission in this case, although a short review extension (two weeks) is certainly possible given the probe announcement. The EU has encountered very little activity in recent months with respect to U.S.-based mergers of any complexity, and this may signal a somewhat more motivated approach by the regulatory going into the new year.

Fiserv (FISV) completed its acquisition of Checkfree (CKFR) for $48 per share in cash, or a total of $4.4 billion.

Carlyle Group also closed its $2.4 billion purchase of Sequa Corp (SQA.A). Shareholders received $175 per share in cash in the deal.

Yet again, there is another mega deal in software:  IBM (NYSE: IBM) agreed to purchase Cognos (Nasdaq: COGN). 

I think it’s a smart deal.  After all, Cognos is still growing and has an extensive product suite in business intelligence, which allows customers to improve the analysis on its data.

Beginning in the 1990s, smarter software marketeers than my generation’s figured out it would be much better to deal with a captive audience of already committed customers. Thus IT suppliers began to put the full court press on their own user conferences and the great all-comer IT trade shows faded away.

I'm usually skeptical of software acquisitions. But IBM's (IBM) $5 billion buyout of Cognos (COGN), the business intelligence specialist, makes perfect sense. Here are four reasons why the pending deal, announced yesterday, is a good fit for both companies -- and their customers.

1. Similar Cultures: I spent many months moderating executive events for Cognos, and also visited the company's headquarters in Ottawa a few times. Cognos's corporate culture is professional, fun and enterprise-focused — a good match for IBM. Cognos would have been a poor fit for Oracle's win-at-all-costs approach to business.

With IBM (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.

Bringing an end to the speculation on who would buy Cognos (COGN), IBM (IBM) has announced that it will pay $5 billion in cash to buy the Business Intelligence leader. Earlier, SAP bought Business Objects. Cognos is IBM’s 27th acquisition since 2006.

Business Intelligence is a hot space right now, which is something we have been covering in a fair bit of detail. Aberdeen Group analyst David hatch has written a number of pieces on the topic, highlighting the major trends:

Before the bell yesterday IBM (IBM) announced that it was acquiring Cognos (COGN) for $5 billion. It pays to read our articles! Though the majority of analysts started to downgrade Cognos due to valuation, I spelled out in my previous article why this was not the case. It will be interesting to see if another suitor emerges.

For the time being, Cognos is going for $58 cash per share which looks like the top being that SAP AG (SAP) is bogged down for the moment and Oracle (ORCL) is still futzing around with BEA systems (BEAS).

IBM's (IBM) purchase of Cognos (COGN) pretty much puts the final nail in the coffin of the independent, publicly-traded BI (business intelligence) firm. SAP's (SAP) recently announced purchase of BOBJ (BOBJ) was the other big one.

Frank Scavo at the Enterprise Systems Spectator offers some perspective:

The thought on the street was that Cognos (COGN) had to get bought soon, given the business intelligence [BI] consolidation land-grab of late -- punctuated by Oracle's (ORCL) acquisition of Hyperion and SAP's (SAP) buy of Business Objects (BOBJ).

So now Big Blue steps up to the plate, and for $5 billion in cash, buys Cognos. This quite large acquisition for IBM quickly adds more BI-oomph to the IBM "Information" portfolio, but also importantly takes Cognos off the market from anyone else. Other suitors would probably have been Microsoft (MSFT) and perhaps HP (HPQ). This BI value could have burnished HP's total managment drive and complemented the Opsware purchase.

The much-discussed marriage of business intelligence [BI] and business process management [BPM] may be a step closer to the altar with last week's announcement by Software AG that it will embed Cognos (COGN) 8 BI with the webMethods product suite.

Software AG, which made the announcement at Integration World 2007 in Orlando, Fla., says the strategic partnership and OEM licensing agreement will allow companies to combine BI with BPM and business activity monitoring, providing real-time and historical data on a single dashboard for actionable insight. The new out-of-the-box component will let users

It does, however, seem as though there is some shrewd motivation behind the plethora of call trading in today’s session. We’re seeing plenty of call selling as we review the tape indicating one of three things. First, today’s action is large relative to current open interest standing, where in the December contract we’re seeing the equivalent to around one half of the position in play. This could indicate that investors who previously bought calls are taking advantage of the improved tone to bank profits. It could also be symptomatic of traders willing to cap a lid on any stock gain ahead of the expiration of the December contract. The large blocks going through in the Dec 35 calls imply a breakeven of $37.15 while at the 40 strike the premium implies a breakeven of $40.43 meaning shares would need to rise almost 16% by expiration. Of 23,000 lots traded in that contract this morning some 19,000 lots were traded to the bid. The other alternative is that investors are buying Citi shares and taking in the premium to enhance yield.

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.

Cognos (COGN), the business intelligence software company, is in a curious position. Cognos's rivals are getting acquired by big players like Oracle (ORCL)and SAP AG (SAP). And the software industry is moving toward software as a service (SaaS) — think Salesforce.com and NetSuite.com. So where does that leave Cognos? The BI software provider has to get a better feel for SaaS, managed services and technology partners. Fast. Cognos's CEO is doing exactly that. Here's how.

I noticed Wednesday morning that Cognos CEO Rob Ashe has joined Third Brigade's board of directors. Smart move. Third Brigade is an up-and-coming security company that also has a managed services focus. Specifically, technology consultants can offer Third Brigade's security wares to their customers for a monthly subscription fee -- much in the way that you pay for cable or telephone service. In fact, Third Brigade in September expanded its partner program to support service providers.

Here is a summary of Tuesday morning’s research note from Paul Steep of Scotia Capital. The business intelligence market continues to consolidate, with SAP’s (SAP) takeover of Business Objects (BOBJ).

It is hard to believe that Goldman Sachs (GS) dropped its rating on Cognos (COGN) to “hold” from “buy” on Tuesday morning on the back of the BOBJ news, according to CNBC. It would appear that Goldman figures that Cognos is losing dance partners, and they just might be right (see post “Takeovers to come“, April 15-07).

With SAP (SAP) buying Business Objects (BOBJ) for $59.35 cash per share, it was just a matter of time before archenemy Oracle (ORCL) would make a move to close the gap. Oracle responded by bidding for BEA Systems Inc. (BEAS) only to be rejected by the board as being too low, several hours later. This implies that the attempt was a knee-jerk reaction that was not coordinated with BEAS.

Before getting into how Cognos (COGN) fits into the picture, just a few more words about BEAS. BEAS is a 'middleware' company. Oracle has made some successful acquisitions in the database and applications segments. Currently ORCL wants to beef up its middleware segment. This would render ORCL the head-to-toe capability that it is striving to obtain. In layman's terms; one stop shopping for all your software needs.

Oracle Corp.’s (ORCL) offer last Friday to buy software developer BEA Systems Inc. (BEAS) for US$6.66-billion is yet another sign that the business application market remains highly competitive, as larger players continue to snap up high growth software companies.

Along with Oracle’s tentative deal and SAP’s (SAP) purchase of Business Objects SA (BOBJ) last week, RBC Capital Markets analyst Mike Abramsky said the chance of other mergers and acquisitions for other software companies happening now is high.

Cognos (COGN) shares have reversed course after Monday’s big run-up, as analysts at both Roth Capital and Jefferies & Co. downgraded their ratings on a valuation basis.

Monday, the business intelligence software company’s shares jumped following the news that SAP (SAP) had agreed to buy Business Objects (BOBJ). That left Cognos as one of the few remaining companies in the sector without a dance partner, sparking speculation that it could be a target for Hewlett-Packard (HPQ), IBM (IBM) or Microsoft (MSFT). But Tuesday the speculation was fading.

Jefferies & Co.’s Robert Schwarz cut his rating on the stock to Hold from Buy. He says the stock, which Monday ran up 14% to $50.50; “appears to fully reflect take-out multiples.” He keeps his price target on the stock at $48.