IBM brains up with $5bn Cognos buy

IBM has announced it intends to buy business intelligence software company Cognos in a $5bn all-cash transaction.

The acquisition, which has been rumoured for several months, continues IBM's strategy of acquiring companies to fill out its software portfolio and provide profit growth.

Cognos, a public company based in Ottawa, Canada, provides tools for building business reports and business performance management dashboards.

The software will complement IBM's existing set of products for data warehousing and information management.

The best of Google Earth

From Hollywood to Vegas and racetracks to controversial domes... click here to travel the world with Google Earth.

Steve Mills, senior vice president and group executive of IBM Software Group, said: "Customers are demanding complete solutions, not piece parts, to enable real-time decision making. We chose Cognos because of its industry-leading technology that is based on open standards, which complements IBM's service-oriented architecture strategy."

It is the 23rd acquisition IBM has made to further its 'information on demand' strategy. The transaction, which works out to $58 per Cognos share, is expected to close in the second quarter of 2008 and provide shareholders a net value of $4.9bn, IBM said.

The move accelerates consolidation that has already begun in the business intelligence area.

After a number of standalone business-intelligence companies combined a few years ago, Oracle bought Hyperion for $3.3bn earlier this year. And last month, SAP announced plans to acquire Cognos' rival, Business Objects, in a deal valued at more than $6.8bn.

A lot of money is at stake in the business intelligence market. Business and technology research company AMR Research, for example, expects spending in the business intelligence and performance management arena to reach $23.8bn by the end of the year, reaching a level that would exceed last year by 3.6 per cent.

Cognos will become a group within IBM's Software division headed by current Cognos president and CEO Rob Ashe.

Martin LaMonica writes for CNET News.com