Oracle announced Thursday that it has agreed to buy Hyperion Solutions for $3.3 billion, in a move to expand in the area of performance management systems.
The acquisition is yet another multibillion-dollar deal in recent years for Oracle, which has shown a hunger for expanding quickly via mergers. The software maker acquired customer relationship management software maker Siebel Systems for $5.85 billion last year and archrival PeopleSoft for $10.3 billion in 2005.
While the PeopleSoft and Siebel acquisitions had product overlap to varying degrees with Oracle's existing business, the Hyperion deal is expected to have little redundancy, Oracle executives said in a conference call with analysts.
Hyperion sells business intelligence tools and financial applications to corporations. The company's software is used to analyze business data, such as sales history, and for financial planning and budgeting.
It also provides "dashboards," or applications that visually represent how a company is performing on a set of measurements, such as improving customer response time or meeting a sales objective.
Oracle, too, provides business intelligence tools, but company watchers have expected it to make a large acquisition of a standalone business intelligence vendor to fill out its product line.
"The acquisition of Hyperion makes Oracle the category leader in the high-growth enterprise performance management market," Larry Ellison, Oracle's chief executive, said in a statement.
Oracle plans to team Hyperion's EPM software with its own Business Intelligence tools and analytic applications, creating an expanded performance management system that includes planning, budgeting, consolidation, operational analytics and compliance reporting.
The deal, set to close in April, is expected to generate an additional 1 cent per share to Oracle's non-GAAP earnings in fiscal 2008 and at least 4 cents per share in 2009.
Under the cash transaction, Oracle plans to pay $52 per share for every share of Hyperion's common stock.
Oracle is also using the Hyperion acquisition to take aim at rival SAP, a leading maker of software for enterprise resource management.
"Thousands of SAP customers rely on Hyperion as their financial consolidation, analysis and reporting system of record," Charles Phillips, Oracle president, said in a statement. "Now Oracle's Hyperion software will be the lens through which SAP's most important customers view and analyze their underlying SAP ERP data."
SAP, however, countered that the Hyperion acquisition will lead to more confusion among Oracle customers.
"Oracle's strategy, limited by its inability to grow on its own, has resorted to attempting to acquire customers. This latest acquisition only further muddies Oracle's already cluttered application landscape," Bill Wohl, an SAP spokesman, said in a statement. "The Hyperion deal is one more way that Oracle attempts to hide the fact that applications is not its core business, whereas applications has been, and will continue to be, SAP's core business."
Ray Wang, a Forrester Research analyst, said: "Oracle has typically sold to CIOs, whereas SAP has typically targeted CFOs. Now, with the Hyperion acquisition, Oracle will have an easier time selling to the business side of the house, like CFOs."
The Hyperion acquisition will give Oracle about a 15 percent market share of the business performance solutions market, which is led by SAS, Cognos and BusinessObjects, Wang said.
Forrester estimates that the business performance solutions market will grow by 11 percent through 2010.
Wall Street cheered the deal, sending Oracle's shares up more than 3 percent in early morning trading to $16.95--despite a decline in the broader markets.
Hyperion shares, as expected, also rose in early morning trading, climbing more than 20 percent to $51.55.