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
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
[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?
[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
[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
[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.