The latest in a string of acquisitions and mergers in the tech sector is the offer by IBM Corp. (NYSE: IBM) to purchase data analytics firm Netezza Corp. (NYSE: NZ) for $27/share, or about $1.7 billion, in cash. The offer is subject to approval by Netezza’s shareholders and the usual clearances and closing conditions.
The offer values Netezza at a mere 9.8% premium to the stock’s closing price last Friday. Just over a month ago, Dell Inc. (NYSE: DELL) made an offer to acquire 3Par Inc. (NYSE: PAR
) for $18/share, nearly 50% higher than 3Par’s previous close. Then Hewlett-Packard Co. (NYSE: HPQ) raised that to $24/share, before ultimately prevailing at $33/share in a too fast, too furious bidding war.
HP has been on a spending spree since it fired CEO Mark Hurd, and one has to wonder if the Palo Alto company has the steel to challenge IBM for Netezza. Or, barring that, to come back quickly with a deal to acquire its own analytics company.
In an interview in June 2010 with Information Week, HP executive vice-president Shane Robison noted that information technology has moved beyond productivity gains into what he called communications and collaboration. The cloud computing environment, the rise of the mobile platform, the explosive growth in the volume of information, and the ability of analytics to make sense of that information are the keys to HP’s strategy.
Yet HP’s offerings in analytics are not where the company wants them to be. Regarding the deluge of information, Robison said, “The fact that you can get to all that information isn’t helpful unless you can do something with it, and the ‘do something with it’ part is where analytics comes in…. [That’s] where the magic is.” And that magic is missing from HP’s bag of tricks.
That magic is what Netezza brings to the table, and there aren’t a lot of competitors who offer comparable services. Virtually all information analytics tools are custom-built and hugely expensive. If Netezza can even give IBM a slight cost and time advantage here, HP has got to be looking at a way either to compete for Netezza or make its own bid for similar technology.
Netezza, in the arms of a bigger company like IBM or HP, is probably worth a lot more than it is on its own. The low-budget premium IBM is offering almost begs for the start of a bidding war.
As of this writing, Paul Ausick did not own a position in any of the stocks named here
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