With the recent rash of tech acquisitions( which indicate to us that the economy is recovering just fine thank you), we knew it wouldn’t be long before Big Blue got into the fray.
The deal is said to value Netezza at $1.7 billion dollars or $27 per share, a 9.8 percent premium from Friday’s closing price of $24.60. Netezza sells appliances that combine analytical software and hardware to help, for example, online dating site eHarmony comb through online profiles and massive Web data to figure out who might be a good match for a particular user. Netezza saw their stock rise %15 in late trading this afternoon, much of that late surge fueled by rumors that there could be a rival company waiting in the wings to challenge IBM. To be honest I really don’t see that happening here where we could get into a Dell/HP/3PAR situation because in this case there are comparable targets in Teradata, ParAccel, Vertica and others that could be had for around the same value. Netezza is not a large company by any means employing only 500 people and the other companies I mentioned are all around that size which from a value perspective means it would probably be smarter to go after one or more of them than to get into a prolonged bidding war with a company like IBM which has some very deep pockets.
To give you an idea of how deep the pockets of IBM are, last year analytics accounted for $9 billion of IBM’s $95.76 billion in revenue last year. Several analyst believe the acquisition train still has a ways to go bolstered by low interest rates, record cash holdings and low stock market values. The other driving force here is that the large vendors all want to be able to deliver what they call the “complete stack” everything from networking and servers to software and services all in one nice neat package.
The companies said they expected the deal to close in the fourth quarter. The merger agreement includes a termination fee of $56 million, according to a regulatory filing, though a termination fee didn’t help Dell win out on 3PAR did it?