Cognos To Buy Adaytum For $160 Million

Minneapolis-based Adaytum provides enterprise performance planning (EPP) software. With the acquisition, Cognos aims to become a leader in the corporate performance management software market.

The deal, OK'd by the boards of both companies, is subject to regulatory approval. Cognos expects the acquisition to be completed in January.

Adaytum was founded in the United Kingdom in 1990 and claims to have more than 1,500 customers globally. With a U.S. office in Minneapolis, the EPP company has strategic alliances with Accenture, Deloitte and Touche and Microsoft as well as a network of value-added resellers.

Adaytum generated $57 million in revenue during the past 12 months.

Both companies have strong channel models. Cognos has about 3,000 partners and resellers.

One Cognos partner and business intelligence solution provider said the new EPP software combined with Cognos' existing corporate performance management (CPM) will allow him to upsell higher into the corporate hierarchy.

"This strengthens a new market Cognos is trying to open," said Mark Quigg, president of InBusiness Solutions, Ottawa. "This gives Cognos a tool for the budgeting process, how companies do forecasting and investment planning. The next phase is to see how a company performs based on that plan using the scorecarding, ratios and key metrics [Cognos offers today. The two work well, hand in hand, and the opportunity for channel partners is the implementation of the tools. Adding that [EPP piece to it gives a better return on investment and gets us closer to the top rungs of the [corporate ladder."

One analyst who follows the business intelligence space called it a good deal for Cognos. "The acquisition makes a lot of sense, and overall there is little overlap between the two companies," said Andrew Braunberg, an analyst at Current Analysis. "Adaytum is a very strong player in the performance planning space and that is an important part of corporate performance management, where Cognos plays strongly. Cognos had a planning tool, but it was a small part of its financial apps package. It makes Cognos a stronger player in CPM, and it picked up Adaytum relatively cheaply. "

Meanwhile, Cognos Thursday reported third-quarter net income of $19.9 million, or 22 cents per share, compared with $13.3 million, or 15 cents per share, for the same period last year. According to First Call/Thomson Financial, that beat the Wall Street consensus of 19 cents per share.

Revenue for the quarter was $138.1 million, up 11 percent over revenue of $124.2 million in the year-ago quarter.

During the third quarter, Cognos garnered four contracts greater than $1 million, including wins with Merrill Lynch, PMI Mortgage Insurance, Fleming Companies and Park Place Entertainment Group.