Business Objects pays $820m for rival

Business Objects has agreed to acquire fellow business reports software company Crystal Decisions in a deal valued at $820m, the latest in a series of buyouts reshaping the business software market.

Business Objects, a French maker of software that finds patterns and trends about companies by pulling information from its databases, and Crystal Decisions announced the deal on Friday. Crystal Decisions is privately held, with headquarters in Palo Alto, California.

Business Objects' offer consists of $300m in cash and 26.5 million shares of its stock, which closed at $20.26 a share on Friday. The deal, which requires regulatory approval, is expected to close by the end of the year, the companies said.

Addressing analysts via teleconference, Business Objects CEO Bernard Liautaud said the deal brings together two "strong and profitable companies". Combined, the companies would have had $736m in revenue last year and more than 3,800 employees. They expect to save $25m next year as a result of the merger.

"This is a combination of two recognised and highly respected leaders," he said.

The company intends to preserve the Crystal Decisions products purchased by more than 25,000 customers, as well as its brand, Liautaud added. He said the companies' product lines have little overlap. Business Objects' software is targeted predominantly at business executives and managers, while Crystal Decisions' software is designed for a broader spectrum of workers.

Business Objects competes with Cognos, Hyperion Solutions and SAS in the 'business intelligence' software market, one of the few bright spots in the ailing business software market. And Business Objects may face more competition soon. Microsoft announced plans earlier this year to add business reporting features to its SQL database software, a move analysts predicted would pit the software behemoth directly against Crystal Decisions and other smaller specialists.

A prolonged decline in corporate demand for information technology has sparked a recent spate of merger activity in the software industry. PeopleSoft moved closer on Thursday to closing its transaction with JD Edwards. Oracle continues to pursue an unfriendly buyout of PeopleSoft. On Wednesday, Best Software, a subsidiary of UK-based Sage Group, announced a $91.9m merger with Timberline Software. Last month, London-based Invensys sold financially troubled Dutch software unit Baan to a group of investors that own Chicago-based SSA Global Technologies.

Alorie Gilbert writes for CNET News.com.