Oracle has agreed to acquire business intelligence software vendor Hyperion for US$3.3 billion (NZ$4.76 billion) in cash.
Oracle says it will combine Hyperion's software with its own business intelligence (BI) and analytics tools to offer customers a broad range of performance management capabilities, including planning, budgeting and operational analytics.
The deal, the latest big purchase by Oracle following its acquisitions of applications vendors PeopleSoft, Siebel Systems and others, will expand Oracle's portfolio of database, applications and middleware with a set of business intelligence products, which are used by companies to collect and analyse information about their businesses.
It continues Oracle's strategy of growing its revenue and customer base through major acquisitions, but also presents the challenge of integrating the products and employees of yet another large company into Oracle, which has announced at least 28 acquisitions since the start of 2005.
The companies hope to close the acquisition by April, subject to customary closing conditions. Oracle has agreed to pay US$52 per share for Hyperion, a premium of 21% over Hyperion's closing share price on Wednesday.
Oracle had a handful of market-leading BI vendors to choose from, which also include Cognos and Business Objects. Hyperion was the best fit for Oracle both in terms of products and culturally, says David Mitchell, head of global software research with analyst firm Ovum.
Oracle has been trying to build out its own BI business, offering tools for integrating data among a number of applications and technologies. But its offerings were focused primarily towards customers of its own software, Mitchell says.
"Adding Hyperion to the family makes it a best-of-breed player, rather than just focusing on the traditional Oracle customer base," he says.
The acquisition could start a "domino effect" in which the other large BI vendors are also acquired, Mitchell says.
Part of Oracle's motivation for the deal appears to be to poach customers from its chief applications rival SAP: Many SAP customers use Hyperion software, and the acquisition will bring them closer to Oracle, Oracle President Charles Phillips says.
Hyperion says it has about 12,000 customers and about 2,500 employees spread over 20 countries. It reported revenue of YS$765.2 million for the fiscal year to June 30, 2006.
Mitchell says he doubts the Oracle acquisition will make much difference to SAP, noting that companies make big investments in their ERP software and then do not switch vendors lightly.
He predicts that Oracle will continue to support other databases with the Hyperion tools, rather than optimising them for its own database. It has continued to support other platforms with the business applications it has bought, he says.
"Oracle has started to get heterogeneity these days, unlike the Oracle of old," he says.
Still, Oracle executives in the past have discussed improving the business intelligence capabilities inside the Oracle database, and buying Hyperion could potentially give the company a selling point over database rival IBM. Hyperion is among IBM's business intelligence partners. Suggestions continue to circulate that should IBM look to buy a BI vendor.
IBM is also a close partner with Business Objects and is developing new products that integrate its data warehousing software with Business Objects' products, sources familiar with those plans say. IBM also has a relationship with open-source BI vendor Pentaho.