M&A 2007: Fight for BI supremacy gets hotter

BANGALORE, INDIA: The global technology industry witnessed a lot of consolidation in the area of Business Intelligence (BI) software and also IT services. The fact that industry majors like IBM, Oracle and SAP acquired prominent BI firms after paying billions of dollars shows how competitive and lucrative the BI space is becoming.

The biggest telecom deal in India was inked this year when Vodafone acquired a controlling stake after paying $11.1 billion in Hutchinson Essar.

Indian IT services companies like Wipro, Satyam and Patni made some modest buys in 2007. US-based services firms CSC and Caritor made inorganic buys in order to expand their offshore presence in India.

SAP-Business Objects

SAP’s $6.7 billion buy-out of business intelligence solutions firm Business Objects is perhaps the most significant deal in the software industry in 2007. Henning Kagermann, CEO of SAP AG, said the merger would ramp up products designed to strengthen decision processes, increase customer value and create sustainable competitive advantage through real-time, multi-dimensional business intelligence.

The German enterprise software major’s move was probably spurred to arch rival Oracle’s acquisition of BI firm Hyperion for $3.3 billion in March 2007. The acquisition gives SAP more play in the Software-as-a-Service (SaaS) space while also ensuring a market lead in the hot BI area. 

Oracle-Hyperion

A new chapter in the ongoing fierce rivalry between SAP and Oracle began in 2007 -- this time in the BI space. This March, Oracle announced its decision to buy Hyperion Solutions Corporation, a global provider of Enterprise Performance Management (EPM) software and business intelligence solutions, through a cash tender offer for $52.00 per share, or approximately $3.3 billion. 

Oracle’s intention is to combine Hyperion's EPM software with its own BI solutions and analytic applications to offer an end-to-end performance management system including planning, budgeting, consolidation, operational analytics and compliance reporting to customers.

The battle royale between SAP and Oracle is only bound to get even more interesting with the fight for BI supremacy.

IBM-Cognos

IBM sealed its merger with Canada-based Cognos this November for $4.9 billion and the agreement is expected to close in Q1 of 2008. The Cognos acquisition would enhance IBM's Information on Demand portfolio of information integration, content and data management and business consulting services to unlock the business value of information.

Big Blue, which does not have its own products in the BI space, has now entered the fray in anticipation of the demand from companies and government agencies.

Cisco-Webex

Networking company Cisco Systems inked a deal with web conferencing solutions company WebEx in March 2007 for $3.2 billion, thereby strengthening its Unified Communications (UC) suite. With this, Cisco can deliver business-to-business collaboration to the Small to Medium Business (SMB) segment. This move also signals the company’s intention to take on Microsoft in the UC space.

Caritor-Keane

California-based Caritor Inc. acquired Keane Inc., another US-based company in an all cash deal for $854 million early this year.

The new combined entity has retained the name of Keane and has a workforce 14,000 employees. Both the firms have a large portion of employees in India.

The US operations for the combined company is based in Boston and Caritor founder chairman and CEO, Mani Subramanian took over as chairman and CEO of the combined entity. The deal is yet another indication of the increasing consolidation in the services industry.

CSC-Covansys

Computer Sciences Corporation (CSC) announced its decision to buy Covansys for $1.3 billion in April 2007. The latter now operates as a separate business unit of CSC. With the buy-out, CSC hoped to boost its global growth strategy, called Project Accelerate, through an increased India presence and also pursuing the mid-size market opportunity.

The acquisition of Covansys adds on 8,200 employees, including about 6,000 in India, nearly doubling the size of CSC’s workforce in India to approximately 14,000. With Global services companies like IBM, HP, Accenture and Cap Gemini expanding their offshore presence in India by the thousands, CSC has been a relatively slow in ramping up headcount. The Covansys deal has surely bridged the gap.

Home truths

Indian firms did not lag behind its global counterparts in the M&A arena. The country watched with awe as many suitors contested for Hutchinson-Essar, a battle of telecos that culminated in the biggest telecom acquisition in India.

Hutch-Vodafone

This year Vodafone bought over the country’s fourth largest mobile service firm, Hutch-Essar. After months of fierce battles from several contenders, it was Vodafone that prevailed with a bid of $11.1 billion for a 67 per cent controlling interest in the company. Vodafone targets a 25 per cent market share in the country in five years’ time. 

The deal underscores the interest of overseas players eager to get a piece of the action of the Indian mobile market that has over 120 million subscribers and a few millions being added every month.

Wipro-Infocrossing

Wipro paid up a whopping $600 million in August 2007 to snap up US-based Infocrossing, a $234-million IT infrastructure service provider. This was the largest buyout of an overseas company by an Indian IT company.

The combined annual sales of Wipro and Infocrossing are expected to touch $1 billion in two-three years time. Wipro Technologies is banking on this big acquisition to drive its growth in global infrastructure services and offer it to premier global clients. The publicly held Infocrossing has over 900 employees and five data centers. The acquisition would help Wipro service its US-based clients better besides ensuring better access to a broader customer base.

Satyam-Nicor

Continuing its inorganic strategy to pick up small companies focused on specific areas, Satyam Computers acquired UK-based IT infrastructure management consulting provider Nitor Global Solutions in a cash deal worth $5.5 million.

This was the Hyderabad-based company’s second buy-out in Europe and it hopes to increase its foray in the infrastructure management space. Nitor is now part of Satyam’s infrastructure management services group.

Patni-Logan-Orviss

In July 2007, Patni acquired Europe-based Logan-Orviss International (LOI), a European telecommunications consulting services company. The value of the deal was not disclosed.

The acquisition was aimed at expanding Patni’s communications and media practice, and to provide telecom operators holistic, multi-level business transformation consulting services for mission-critical IT initiatives.

Patni- Taratec Development Corp

Patni acquired US-based Taratec Development Corp, a life sciences consultancy company for $27 million in July 2007. With this acquisition, Patni added on life science consultancy capability to provide integrated business, information technology, and regulatory compliance products and services in the areas of regulatory compliance, analytics, drug safety, and pharmacovigilance.

© CyberMedia News