Is Business Objects [BOBJ] putting itself up for sale? The French newspaper Le Figaro reported on September 15th that Business Objects SA had retained Goldman Sachs to find a buyer. The newspaper did not name its sources for the story. The newspaper stated that five companies were interested with SAP the leading candidate. Shares of Business Objects are up approximately 6% as I write this post.
This is still just a rumor (at least for now.) There have been previous rumors circulating about both Business Objects and Cognos being acquired over the past year and the software consolidation does not seem to be abating anytime soon To date both Business Objects and Cognos have been acquirers rather than being the acquired. But there are still several high tech titans that might be hungry for a fish that size.
Keep in mind that firms hold discussions with other firms about mergers or acquisitions very often. Sometimes the talks are very exploratory and sometimes they get into a formal due diligence. But no matter how serious the discussions get, it is not uncommon for the parties to end the discussions because they feel there isn’t a fit, maybe they feel another firm much be a better fit or the price is not right.
The usual suspects mentioned as suitors are SAP, IBM, Oracle and Microsoft. Two other potential bidders, that are long shots but maybe should consider acquiring Business Objects, are HP and EMC.
Why should any of them buy Business Objects? The company, products, customers and cash flow are all very attractive. Business intelligence, performance management and data integration are all growing markets that are high on priority lists for IT projects.
Let’s handicap the potential suitors:
[Pro] Business Object provides SAP with expanded BI and PM
offerings outside its application framework, giving it a significant software
product not requiring its application software. SAP makes the purchase just to
keep up with Oracle’s purchase of Hyperion. And Business Objects is a European
company with a significant
[Con] SAP has generally shied away from purchasing larger firms and acquired smaller firms such as OutlookSoft in its “tuck-in” strategy. Does SAP want to acquire a company of this size? Although Business Objects expands the capability for SAP customers does SAP really want to be selling best-in-class BI/PM software outside its application customer base? Ranking [B-]
[Pro] Larry Ellison wants to own the world! No one would have been surprised if Oracle had bought Business Objects instead of Hyperion before, so wouldn’t the same logic apply? Too many acquisitions (that does not seem to be a limiting factor yet!) As opposed to SAP, Oracle already sells databases and other tools outside its application customers base so best-of-breed BI software works well in their business model. Oracle would be able to rationalize Hyperion and Business Objects into a cohesive product roadmap and long-term architecture.
[Con] How many overlapping companies can Oracle absorb without having customer too afraid to buy? Is the product overlap with Hyperion, Siebel Analytics and their own pre-merger BI tools too great to really create synergy? Ranking [B]
[Pro] Software is becoming IBM’s top business line and Business Objects would be great jewel to add to it. In addition, IBM’s services group would leverage world-wide systems integration opportunities. Does IBM, fearing its rivals will buy the best BI pre-plays, simply buy for defensive purposes?
[Con] IBM has stayed away from major purchases in the BI and application markets in order to maintain that vendor-neutral in these markets. The lose of neutrality might eliminate some potential business integrating Business Objects competitors, however, if those competitors were bought out by IBM’s competitors then IBM would not get the business anyways. Ranking [A-]
[Pro] What a great way to breakout from their application developer focused approach to building BI and analytics capabilities using a best-in-class BI suite. The sophisticated solutions offered by Business Objects would expand Microsoft offerings to enterprise deployments. It also picks up large enterprise-class customers quickly without having to convince them to give up their best-in-class BI software.
[Con] It has preferred smaller acquisitions, like ProClarity, that it can blend into their existing products rather than larger software acquisitions. How would Business Objects employees and customers perceive a Microsoft acquisition? Ranking [B+]
[Pro] HP has been expanding its software business just as IBM has. HP has dipped into BI by developing NeoView and through its acquisition of consulting firm Knightsbridge. Business Objects enables HP to expand its services business more aggressively into BI, DW and PM projects rather than its more traditional infrastructure-type services. This expands both their software and consulting business without cannibalizing ay of their existing businesses.
[Con] This would be a large software acquisition for HP and may take them out of their comfort zone of infrastructure-related software. Ranking [A]
[Pro] EMC is another hardware company that has been expanding their software business. Purchasing Business Objects supports that goal and also diversifies their software from disk storage related business. VMware has been a great example illustrating the value of that diversification.
[Con] This would be a significant departure for their software or services businesses and might require a significant mindset change and resource allocation to be successful. Ranking [C-] (Despite this lower ranking who knows what they are thinking? A lot of people thought they were nuts in acquiring VMware.)
Will Business Objects get acquired? Some would say it is inevitable that the software titans will acquire every significant business that competes with them.