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IBM Corp. continued the development of its Information on Demand software business Monday as it agreed to buy Ottawa, Ontario-based business intelligence software maker Cognos Inc. for $5 billion in cash. The two companies issued a statement saying Armonk, N.Y.-based IBM will pay $58 a share for Cognos, reflecting a premium of 9.5% to the shares' closing price of $52.98 on Friday on the Nasdaq. Cognos had already produced a one-year return of 37% for its shareholders, as its stock leapt about 20% in October after German software company SAP AG's €4.8 billion ($6.8 billion) offer for Business Objects SA of France put software makers in the M&A spotlight. Given that Cognos has no long-term debt and a net cash position on its balance sheet, the statement said the net cost of the acquisition is $4.9 billion. Cognos provides intelligence and performance management software to more than 23,000 customers in 135 countries, and IBM plans to uses its operations to help build up strength in information integration, content and data management and business consulting services. The buyer said Cognos is its 23rd acquisition to support its Information on Demand strategy. IBM said that Cognos provides the only complete business intelligence and performance management platform that is fully integrated on an open-standards-based service oriented architecture. It added that together the companies will deliver the industry's most complete, open standards-based platform with the broadest range of expertise to help companies increase the value of their information. "Customers are demanding complete solutions, not piece parts, to enable real-time decision making," said Steve Mills, senior vice president of the IBM Software Group, in the statement. The acquisition is the latest move for Big Blue to rely less on its famous hardware products and more on software - a movement that really took off with the company's pivotal 2002 purchase of PricewaterhouseCoopers' consulting arm for $2.5 billion. The statement said the deal is subject to regulatory and Cognos shareholder approval and is expected to close in the first quarter of 2008. Cognos has been growing through acquisition and last month completed its $306 million, all-cash purchase of analytics software company Applix Inc. of Westborough, Mass. In January, the company said it had bought Celequest Corp., a Redwood City, Calif.-based provider of operational business intelligence solutions, for an undisclosed amount.  Deal Video
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