Information Advantage (IA) has signed a definitive agreement to acquire IQ Software in a deal valued at about $65 million.
The purchase will be accounted for on a pooling of interests basis and IA, which generated revenues of $30.2 million last year, will issue 1.96 of its common stock in exchange for one share of IQ stock. IQ turned over $25 million last year.
Rick Parker, IA?s vice president of marketing, explained the rationale for the acquisition: "We wanted to bulk up and be bigger. The market is maturing and this helps us to be a bigger player. But, we also have complementary product lines and this will allow us to play in more deals.
He went on: "We sell at a high level in the organisation and do mainly interactive analysis, while IQ sells query and reporting tools to workgroups and departments. This is a lower price, higher volume market, but it now means we can move in from both angles."
He added that no redundancies were anticipated as a result of the deal and the IA executive management team will remain intact. However, Charles Chitty, president and chief executive of IQ, will join the IA board and become senior vice president of vertical business intelligence applications.
IA will begin reselling IQ?s IQ Objects and IQ Vision offerings with immediate effect, but by the end of the year, the products will be integrated with IA?s Decision Suite online analytical processing (Olap) engine via an Active Content Server.
This will merge live data handled by both product sets, put it up on a screen and enable users to drill down into it. IA has not yet decided on how to brand its new product family, but the IA and IQ product lines will also continue to be sold as separate entities, if desired.
Nigel Pendse, analyst and author of 'The Olap Report', said: "This looks like a more logical deal than Arbor?s acquisition of Hyperion as these two companies largely complement each other and there?s no confusion about who is acquiring whom. The enlarged IA will have revenues of about $55 million and about 420 staff. This still leaves it slightly behind Microstrategy, its main competitor."
He added that, like the Arbor/Hyperion merger, IA would soon need to demonstrate how it intends to integrate the two companies? people and products, but at least in this case, there should be no conflict of interests between partners or distributors.
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