Thursday, March 01, 2007

Oracle hustles Hyperion

Oracle is seeking to make an addition to its series of acquisitions in the enterprise software space. The target this time is Hyperion (HYSL), one of the leading vendors of business intelligence software. The deal was announced today.

The parties have agreed to a cash offer of $52 per share, or approximately $3.3 billion. The offer is about 21% above Hyperion's stock price prior to the announcement.

Although this is a big deal, there's really not much risk. Hyperion is already an Oracle partner. In fact, it runs Oracle's E-Business Suite and Siebel systems internally. There is also not a great deal of overlap with Oracle's existing offerings. Business intelligence is a complementary product, and these solutions tend to integrate easily with other products. There is a little overlap with some of Oracle's own reporting products, but not much. When customers want industrial strength performance management tools, or business analytics, they typically go to vendors like Hyperion.

The market for business intelligence products has been one of the brighter spots in enterprise software in the past few years. Because of Sarbanes-Oxley, companies are paying more attention to monitoring business performance, and vendors like Hyperion have responded with more products to analyze trends in the mountains of data produce transactional systems produce. As a result, the market for these products is growing at a compound annual rate of 11% per year, well above the business software market generally.

Another plus for this deal: Hyperion is a Tier I vendor, with 12,000 customers, including 91 of the U.S. largest 100 companies. Many of these companies are also customers of SAP. So, ultimately, this deal could give Oracle another avenue into these sites.

The market also seems to view the deal positively. Oracle's share price is up over 3% a few hours after the deal was announced. The transaction is expected to close in April.

Check out Hyperion's website for more information. There is quite a bit of material there about the Oracle/Hyperion deal.

Update: Computerworld is reporting mixed opinions from Hyperion users on the deal.

Update, Mar. 12: Clint Boulton points out that Hyperion's products are not all complementary to Oracle's. Specifically, Oracle's own financial planning and budgeting applications and the excellent performance management products that it acquired from PeopleSoft. He quotes Keith Gile at Business Objects (a Hyperion competitor), who listened in on an Oracle conference call about the deal:
"Basically, their management came on the phone and pretty much threw 'em under the bus and said these things weren't good enough, and therefore, "we went out and bought a pure-play, best-of-breed performance management solution in Hyperion."
So, in the view of Gile and Boulton, the addition of Hyperion's products threaten to dilute some of the products Oracle already has in its portfolio.

Related posts
Rumor mill: Oracle to acquire SAP
Oracle does the right thing with open source acquisition

Philly pulls plug on failed Oracle project
Two more business intelligence vendors are hooking up
Vendor consolidation hits business intelligence sector

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