Trouble is brewing over Informix's plans to buy Red Brick Systems (PC Week, 13 October). Informix has agreed to buy Red Brick in a bid to consolidate the database company's interests in the data warehousing market. But the deal will first have to be ratified by Red Brick's shareholders and there is already evidence that resistance may be mounting.
If the purchase goes through, Informix plans to sell and support Red Brick's current portfolio, initially, but will bring these products and services in line with its own Decision Frontier product line. "We intend to offer the market the most comprehensive data warehousing solutions in the industry," stated Bob Finocchio, Informix CEO and president.
David Burman, director of research at market analyst the Butler Group, said: "This is an entirely logical move for Informix. Their own efforts have not really come to anything and they are probably running scared of the impending release of (Microsoft) SQL Server 7.0 with its OLAP (online analytical processing) capabilities."
Along with Sybase, Informix has passed through difficult times with accusations that it artificially pumped up revenue figures to increase its market standing. Burman feels this was deemed necessary by Informix because "a database is a database" and its services add value to the initial purchase - services that Informix couldn't supply sufficiently. "It now depends on how Informix handles the integration and how it puts the new message across," he said. "Data warehousing is creeping up on most companies' agendas with more interest being shown in knowledge management. This higher profile for warehousing may bring the necessary business for Informix to begin a turnaround."
Details of the agreement state that Informix will offer a share exchange of 0.6 per share from its common stock for each share from Red Brick in a transaction valued at $35 million (#20.5 million).
The purchase is expected to go through by the end of the year, dependent, of course, on Red Brick shareholders' acceptance and the completion of an independent audit of Red Brick's financial results for the first three quarters of this year.
Calls to reject the offer are already being made by New Valley, a US investment banker and brokerage firm, that holds five per cent of Red Brick's common stock. New Valley feels that Red Brick is being undervalued, describing the offer as "grossly inadequate".
If the deal goes through, Red Brick's research and development, marketing and data warehousing consultancy divisions will be integrated with Informix Data Warehousing Division. Other divisions, such as administration, sales and customer support will be absorbed by their Informix equivalents.
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