The Eagle Blog

The Cognos Deal

Today the deal was announced with IBM paying about $5 Billion for Cognos. There will be a number of reactions to the deal and it will be interesting to watch this play out.

I don’t think anyone was surprised that Cognos was bought, especially after the recent Business Objects deal with SAP, and the earlier Hyperion deal with Oracle.
I also don’t think that IBM was a big surprise, they have been named as a potential suitor at various points along with people like Microsoft, Oracle, HP and others. Certainly IBM is one of the big players in the software world with DB2 etc and the growth in the Business Intelligence market will help both their software and their services businesses.

There will be those people who “bemoan” the loss of Canada’s largest software company to a “foreign owner”.
There will be people in Ottawa who are concerned for their future … I expect that the core business will be a great asset to IBM, but what about the future of the finance department, the marketing, technical support, legal etc.
There will be people who are concerned about the fact that the big companies keep getting bigger, and the there becomes less choice in suppliers.

What is my take …

1. As a business owner my responsibility is to look after the interests of my shareholders and this deal provides the Cognos shareholders with approximately a 10% premium on the recent share price .
2. We operate in a global economy and IBM is a global company. Its Canadian arm employs a lot of Canadians and will continue to contribute to the Canadian economy. I don’t think this is necessary such a bad deal for a Canadian company.
3. I don’t think that Cognos could have remained independent in the face of its large competition and remained a viable player. This deal just ensures the future of its key product line.
4. There will be people who leave Cognos because of this deal … they don’t want to work for IBM; they don’t like change; they get a big payday with their shares/options; they get laid off … for whatever reason. Those people will bring value to the Ottawa economy as they integrate into other entities or as they create their own spin offs or start ups.
5. I am a little sad at a Canadian icon becoming a part of Big Blue, but that is an emotional response and not a business one. At the end of the day this is a good move for most!

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