Back in June of last year, I asked if the BI hunters would become the hunted. After years of aggressive M&A, the business intelligence leaders had coalesced around similar product portfolios with littler differentiation in the marketplace. I was certainly not alone, as virtually every publicly traded BI vendor has been linked to some merger or acquisition rumor in the last two years.
The wait is finally over, as the ever acquisitive Oracle announced the acquisition of Hyperion Solutions for $52.00 per share in an all cash tender. The total purchase price amounts to $2.9B net of Hyperion's existing cash balance.
Some thoughts on the deal...
- It's among the most expensive deals Oracle has done -- The purchase price implies a multiple of more than 7x EV/TTM maintenance revenues; slightly higher than what Oracle paid for Siebel or Peoplesoft.
- There's a valid reason for paying that premium -- Hyperion and Oracle had far less overlap among their revenue bases, and Hyperion is currently enjoying healthier organic revenue growth than were Siebel and Peoplesoft at the time of their acquisitions.
- Investors interpreted today's news as evidence that Oracle won't preannounce poor results -- Although Safra Catz and Chuck Phillips refused to comment on the recently closed February quarter, investors "read between the lines" today when Safra indicated that full results would be released on March 20th. Many interpreted that to mean Oracle would not preannounce disappointing results, which no doubt played a role in Oracle's strong stock performance today.
- This fits into the strategic bucket -- Oracle has made 30 acquisitions in the last three years. While many have been financially driven, Hyperion would fit into the strategic basket in that it fills critical whitespace and represents the acquisition of a "best in class" asset. Hyperion has a dominant position in the CFO's office, by virtue of its long-standing leadership position in financial reconciliation and budgeting apps.
- Despite prior rhetoric, there's not tremendous product overlap -- Prior to today's announcement, Oracle would've had you believe they were a major player in the BI space. Yet, curiously, Chuck Phillips was quick to point out today how little product overlap there is between the two companies. The truth is Oracle has long had an OLAP engine that has been vastly inferior to the industry-leading Essbase. Oracle has a solid set of analytical tools acquired from Siebel, but they differ from the financially-focused analytical apps that Hyperion brings to the table.
Today's deal has created a new round of M&A furor in the BI space; yet I remain largely unconvinced that another deal is imminent. Both Cognos (COGN) and Business Objects (BOBJ) trade at lofty EV/maintenance multiples and are no stranger to M&A speculation (read: it's in the stock price). One can never say never, but unless IBM buys one of them (as has been rumored about 1000 times in the past), I just don't see an obvious fit.
Note: At the time of this writing, I and/or funds I maintain discretionary control over, maintained a long equity positions in SAP but did not maintain a position (long or short) in any of the BI vendors, IBM, HPQ or ORCL.
bi business intelligence bobj cogn hysl mstr consolidation ibm oracle software M&A woodrow enterprise+irregulars
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