Oracle to Buy Hyperion for $3.3B

Oracle has agreed to acquire business intelligence software vendor Hyperion Solutions for US$3.3 billion in cash, it said Thursday.

Oracle said it will combine Hyperion’s software with its own business intelligence and analytics tools to offer customers a broad range of performance management capabilities, including planning, budgeting and operational analytics.

The deal, the latest big purchase by Oracle following its acquisitions of applications vendors PeopleSoft, Siebel Systems and others, will expand Oracle’s portfolio of database, applications and middleware products with a set of business intelligence products. These are used by companies to collect and analyze information about their businesses.

It will continue Oracle’s strategy of growing its revenue and customer base through big acquisitions. But it will also present the challenge of integrating yet another large company into a business that is still absorbing the products and employees of PeopleSoft and other acquisitions.

The companies hope to close the acquisition by April, subject to customary closing conditions. Oracle has agreed to pay $52 per share for Hyperion, or about $3.3 billion, a premium of 21 percent over Hyperion’s closing share price Wednesday.

Part of Oracle’s motivation for the deal appears to be to poach customers from its chief applications rival, SAP. Many SAP customers use Hyperion software, and the acquisition will bring them closer to Oracle, said Oracle President Charles Phillips in a statement.

Hyperion has 12,000 customers using its software, and about 2,500 employees spread over 20 countries, according to information on its website. It reported revenue of $765.2 million for the fiscal year ending June 30, 2006.

Earlier this year, Oracle was rumored to have been in acquisition talks with Hyperion rival Business Objects of Paris.

In the past, Oracle executives have discussed improving the business intelligence capabilities in its Oracle database, and buying Hyperion could potentially give the company a selling point over database rival IBM. Hyperion is among IBM’s business intelligence partners.

But Oracle is also close partners with BI market leader Business Objects, and is developing new products that integrate IBM’s data warehousing software with Business Objects’ products, sources familiar with those plans said this week. It is also a close partner of open-source business intelligence vendor Pentaho.

The acquisition will be at least the 27th deal Oracle has announced since the start of 2005.

-James Niccolai, IDG News Service (Paris Bureau)

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