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Shares of Cognos Inc. soared 13.6% on Monday on speculation that the business intelligence software company may be a takeover target after chief rival Business Objects SA was snapped up by SAP AG. Walldorf, Germany-based SAP announced Sunday it would buy Business Objects of Levallois-Perret, France, for $6.8 billion. That deal comes seven months after Oracle Corp. acquired another business intelligence competitor, Hyperion Solutions Corp., for $3.3 billion. That spasm of consolidation leaves Ottawa-based Cognos the largest independent provider of analysis, data mining, query and reporting, and other software used by enterprises to collect, store and analyze business data. "They're the only game in town, so they're very desirable," said Ken Rudin, CEO and co-founder of LucidEra Inc., a privately held maker of on-demand business analytics software. Other mid-market business intelligence specialists include publicly held MicroStrategy Inc., SAS Institute Inc. and Actuate Corp. Over the long-term, Cognos will struggle to compete with enterprise software giants such as SAP and Redwood Shores, Calif.-based Oracle, experts said. "It puts Cognos in a very challenging situation, and they have some sense of urgency to find a partner here," said Nathan Schneiderman, an analyst with Roth Capital Partners in Newport Beach, Calif. "Cognos does a fair amount of business with existing customers, but it will get more challenging to win large new customers." Microsoft Corp. and IBM Corp. are the companies most likely to have an interest in Cognos, with both needing to beef up their business intelligence offerings to compete with Oracle and SAP. Hewlett-Packard Co. has also surfaced as a potential buyer. In a Monday research note, Mark Murphy, managing director at Broadpoint Capital Inc., said Cognos would fetch or $4.7 billion to $5.3 billion, or $57 to $65 per share, if it were sold. Cognos shares closed at $50.50, giving the company a market cap of $4.1 billion. Business intelligence, or business analytics, as it is often called, is one of the hottest sectors in software, as corporate customers seek to bolster their financial performance by analyzing customer data and behavior. According to AMR Research, expenditures in the business intelligence and performance management sector will hit $23.8 billion this year, up 3.6% from 2006. Cognos itself has used acquisitions to fuel growth. In September, the company moved to buy analytics software provider Applix Inc. for $339 million. Business Objects has been one of the most acquisitive players in the sector. In July, the company closed a small deal for privately held Inxight Software Inc., a provider of text analytics software. In the spring, the Pari company acquired enterprise performance management software maker Cartesis SA for $300 million in cash and in December it bought Nsite Software Inc., an on-demand software providet for an undisclosed sum. In other transactions underscoring the consolidation, business intelligence software maker Verint Systems Inc. earlier this year closed a $938 million deal for Witness Systems Inc.  Deal Video
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