IBM Corp. said that it has agreed to pay $1.7 billion for Netezza Corp. which helps businesses sort through data on corporate servers.
The Netezza deal would help IBM expand in "analytics," where the company foresees a major source of growth over the next few years. IBM expects to grow annual revenue from analytics services, software and hardware sales to $16 billion by 2015, up from $9 billion last year. It estimates the total annual market that amounts to roughly $100 billion.
IBM has been venturing into the analytics business through acquisitions. The company says it has spent $12 billion on 23 separate analytics companies over the past four years. Its biggest takeover in 2009 was a $1.2 billion deal for SPSS Inc., a company that makes analytics software for predicting future trends.
Netezza's software and hardware systems are designed to help companies use data about their businesses to make strategic decisions. The British TV, Internet and phone service provider Virgin Media Inc. is one of the company which uses Netezza’s technology to assess the affect on sales with change in price or tariffs. Netezza is based in Marlborough, Massachusetts with an employee strength of about 500 employees and has prestigious names like Neiman Marcus, Time Warner Inc. and NYSE Euronext Inc. among its customers.
IBM is offering $27 per share for Netezza, a 10 percent premium over Friday's closing share price of $24.60. Netezza shares rose $3.67 from Friday to trade at $28.27, above the offering price. IBM shares rose $1.60, or 1.2 percent, to $131.79.
With the acquisition spree on its full swing in the industry, it has been noted that the big tech manufacturers are snapping in smaller companies as they compete with one another to broaden the types of products and services they offer to their corporate clients. Latest instances include the Hewlett-Packard Co. topping Dell Inc. in a bidding war for Data Storage Company 3Par Inc. and HP’s plan to buy the network security company ArcSight Inc. for $1.5 billion would help the company venture into an industry where it would also compete with another big name like the IBM.
