BI consolidation rumors boost Business Objects' stock

Business Objects SA's share price surged in Paris Thursday morning, as rumors swirled of a takeover bid from IBM or Oracle.

Buying the French business intelligence software vendor could be a good way for IBM or Oracle to use the cash they have available, according to one analyst. The three companies declined to comment. "We don't comment on rumors," said Business Objects spokesman Philippe Laguerre.

Oracle made a big push into the business intelligence market on March 22 with the launch of three software bundles branded Oracle Business Intelligence Suite. The bundles combine Oracle's database, its Fusion middleware and analytics software it acquired with its purchase of Siebel Systems. That deal, worth almost $6 billion, closed on Jan. 31.

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Business Objects SA's share price surged in Paris Thursday morning, as rumors swirled of a takeover bid from IBM or Oracle.

Buying the French business intelligence software vendor could be a good way for IBM or Oracle to use the cash they have available, according to one analyst. The three companies declined to comment. "We don't comment on rumors," said Business Objects spokesman Philippe Laguerre.

Oracle made a big push into the business intelligence market on March 22 with the launch of three software bundles branded Oracle Business Intelligence Suite. The bundles combine Oracle's database, its Fusion middleware and analytics software it acquired with its purchase of Siebel Systems. That deal, worth almost $6 billion, closed on Jan. 31.

IBM already partners with business intelligence vendor Cognos, a rival of Business Objects. On March 7, IBM announced that it will work more closely with Cognos to develop business intelligence software with a service-oriented architecture. At the time, analysts suggested that acquiring Cognos would be a logical next step for IBM.

Such a move could be hastened if Oracle were to bid for Business Objects, said David Bradshaw, principal analyst at Ovum.

Bradshaw dismissed another rumor he had heard, that German ERP vendor SAP AG could buy Business Objects. "They have not made many large acquisitions, and they already have their own [business intelligence] technology," he said.

The business intelligence market is dominated by a group of large, independent vendors. Business Objects expects its revenue to total $1.2 billion to $1.215 billion this year. Cognos expects revenue of $950 million to $970 million in its current financial year, which ends Feb. 28. Of the other large business intelligence vendors, only Teradata belongs to another company (NCR), Bradshaw said.

Based on Business Objects' market capitalization, a buyer would have to pay over €2 billion ($2.5 billion) for the company, he said.

Business Objects and Cognos "have been around a while. Maybe the other players like having independents in the field," Bradshaw said.

But should IBM and Oracle choose to change that status quo, buying Business Objects would be harder for Oracle than it looks, he said.

"At first glance, it looks like a marriage made in heaven, but most of Oracle's customers already have at least one [business intelligence] system," and often more, he said. Oracle applications have to work well with those different [business intelligence] tools, and customers value that flexibility, he said. "Future customers would not want to be confined to having one [business intelligence] tool."

Trading in Business Objects shares opened in Paris at €24.80 on Thursday, up from the Wednesday closing price of €23.02. As the rumors spread, the price peaked at €25 but by the close of trading had settled back to €24.76, up 7.6% on the previous day's close.

The IDG News Service is a Network World affiliate.