WESTBORO, MA – Activity in the business analytics market picked up a notch last month with the announcement that Applix, Inc. will be acquired by Ottawa-based business intelligence provider Cognos, Inc. for roughly $339 million.
Applix, a publicly held company based in Westboro, Mass. with more than 3,000 customers, supplies business performance management (BPM) solutions to a wide range of fields, including the healthcare sector. The company is expected to complement Cognos’ flagship products – Cognos 8 Planning, Cognos 8 Controller and Cognos 8 Business Intelligence.
Particularly appealing, Cognos officials say, is Applix’s TM1 OLAP (online analytical processing) engine, which would boost Cognos’ performance management software by adding profitability, customer and product analysis capabilities.
“Applix will broaden our solution offering and provide Cognos with an innovative, 64-bit, in-memory analytics capability,” said Rob Ashe, CEO of Cognos, in a press release. “It will also bring into the company a very strong employee and customer base that has been committed to performance management through high-impact analytics.”
In a Sept. 5 conference call, Ashe emphasized that Applix’s TMI would not overlap with Cognos’ own OLAP server, PowerPlay.
Cognos had reported a strong first quarter, with $22.4 million in profits based on $236.7 million in revenue, positioning it in a crowded, $6.25 billion business performance and analytics software field that includes Business Objects, Oracle and SAP. The Cognos deal is just the latest in a string of announcements related to the field, highlighted by Business Objects’ acquisitions of Inxight Software, Cartesis and NSite Software and its release of Crystal Decisions this year, SAP’s purchase of OutlookSoft and Oracle’s $3.3 billion purchase of Hyperion in April.
“They’re all trying to round out their business analytics platforms,” said David Corbett, a project manager at Applix, in an interview two months ago. “As the healthcare field becomes more competitive, business analytics becomes more and more important.”
Corbett says healthcare providers are interested in business intelligence (BI) solutions because they provide the ability to plan ahead, to anticipate healthcare costs and needs based on data compiled from previous events. And as business intelligence solutions become more advanced, they’re being combined with performance management solutions.
Cognos, which serves more than 23,000 customers in more than 135 countries, has made a cash tender offer of $17.87 per share, which equates to approximately $339 million, or $306 million net of Applix cash on hand, according to the press release. The offer is 24 percent higher than Applix’s share price at the close of the day on Sept. 4. The deal is expected to be completed by the end of 2007.
“We believe that this combination represents a great opportunity for the entire Applix community,” said David Mahoney, president and CEO at Applix, which employs 210 people and reported $61.2 million worth of sales in the 12 months ending June 30 and year-over-year growth of 45 percent. “Our organizations are very complementary, and I feel that they will blend together to create a leader in the financial performance management market.”
Analysts weighing in shortly after the announcement called the deal “pricey,” since it will cost Cognos more than $300 million but bring in just $60 million in revenue. According to a Dow Jones Newswire report, Cognos has been rumored for months to be a target itself for acquisition, with Oracle and IBM mentioned most frequently as suitors.