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Business Objects to Take Crystal Decisions

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Posted July 18, 2003 By Michael Singer     Feedback

The $820 million acquisition joins two strong players in the business intelligence software sector.

French-owned software maker Business Objects Friday said acquire privately-held Crystal Decisions in a cash and stock deal worth an estimated $820 million.

The transaction joins two large firms that specialize in business intelligence (BI). Applications generally include decision support, query and reporting, online analytical processing statistical analysis, forecasting, and data mining. The two companies compete with top-tier players and BI pure plays like Cognos, Hyperion and MicroStrategy

The deal would also forfeit Palo Alto, Calif.-based Crystal Decisions' plans for an IPO. An investment group that includes Silver Lake Partners and Texas Pacific Group owns Crystal Decisions, announced plans to go public earlier this year.

Business Objects, which has U.S. offices in San Jose, Calif. said the acquisition should close sometime between October and December 2003 and will have to go under serious review by shareholders as well as both the U.S. Securities and Exchange Commission as well as its European counterpart.

The combined company is expected to have more than 3800 total employees including at least 500 salespeople and 1000 staffers in technical support, education, and professional services. The acquisition will also combine more than 16 million licenses and upwards of 700 alliance partners.

"With this combination, we will seize the opportunity to take a leadership position in the BI market," Business Objects chairman and CEO Bernard Liautaud said in a statement. "The two companies are not only successful leaders in their space but have extremely complementary businesses, across many dimensions: product capabilities, distribution channels, international coverage, and skillset. Together, we will become the clear choice for organizations looking to standardize on a single BI provider."

Business Objects' applications are targeted for a variety of environments, including client/server, extranets, and the Internet. The software lets companies not only analyze and improve decision making within enterprises, but also with trading partners, suppliers, and distributors. The company's software is compatible with database products from Oracle, IBM, and Microsoft.

Crystal Decisions counts Ford Motor Company, Coca-Cola and AT&T as customers and has more than 350 OEM relationships, including Hyperion, Microsoft, Peoplesoft, and SAP.

"In the business intelligence market, size and scale will be key ingredients to long-term success. This combination will accelerate our own plans to better serve our customers by offering a broader product line," Crystal Decisions president and CEO Jon Judge said in a statement.

While most large companies have already successfully gathered valuable data about customers, suppliers and operational performance, the market for BI is fairly rosy. Analyst firm Datamonitor predicts investment in BI software by European enterprises will quadruple, from $1.09 billion in 2001 to $5.8 billion in 2005 -- an average annual increase of almost 40 percent. Britain and Germany account for 40 percent of the market, and although they will continue to dominate, France, Benelux (especially the Netherlands) and Scandinavia are set to become much more prominent.

Under the terms of the agreement, Business Objects will issue approximately 26.5 million shares of common stock in respect of outstanding Crystal Decisions common shares and stock options, which will represent approximately 29 percent of the combined company's shares. In addition, Crystal Decisions stockholders will receive an aggregate of $300 million in cash.

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