Business Objects Plans to Acquire Firstlogic
Business Objects plans to acquire privately held Firstlogic for approximately $69 million. The companies said on Wednesday they expect to complete the acquisition in Q2 2006. If it goes through, the deal continues Business Objects' acquisition spree, after having purchased SRC Software in August 2005, Medience SA in October 2005, and Infommersion in November 2005.
The announcement comes fewer than three months after a failed attempt by Pitney Bowes to purchase Firstlogic for approximately $50 million. The proposed acquisition was abandoned on November 15, 2005, after both companies reviewed a second request for information issued by the FTC and decided it was in both companies' interest not to proceed.
While Business Objects is best known for its BI and performance management software, it also offers a range of data integration tools as part of its enterprise information management (EIM) strategy. Firstlogic's software will complement that, according to John Schwarz, CEO of Business Objects. "Building a business intelligence strategy without a complete EIM solution is like trying to complete a puzzle without all the pieces," Schwarz said in a written statement. "With [the] acquisition of Firstlogic, Business Objects acquires one of the most important pieces of the EIM puzzle--data quality."
The ability to offer data quality management tools will strengthen Business Objects' competitive position at a time when companies are standardizing on fewer business intelligence tools, Schwarz said in the statement. "As companies face the pressures of regulatory compliance, expanding numbers of data sources, and the ability to link data to performance management initiatives, customers are demanding an EIM solution that can help them scale with these dynamics. We believe EIM solutions will be an important growth driver for our company in the years to come."
Despite the $19 million dollar difference between the failed Pitney Bowes acquisition in November and the successful Business Objects purchase today, Robert Lerner, senior analysis at Current Analysis, says Business Objects isn't overpaying. "I was surprised that Pitney Bowes originally got [Firstlogic] for $55 million, I thought that was kind of low-balling."
Lerner says this latest proposition is a win for both companies. "Firstlogic has been evidently shopping themselves for some time and Business Objects is a highly visible, financially secure company. Plus, Business Objects has demonstrated it knows what to do with acquisitions. Pitney Bowes has had some trouble in the past with acquisitions."
As for Business Objects, the proposal is "superb" and is a recognition that data quality is a critical component of BI, Lerner says. "Even if Business Objects wants to have a deeper presence simply in the standalone data quality market, it's picked one of the major players to do it with."
If there is a downside to the deal, it's Firstlogic's legacy postal business, which represents a significant part of the company's revenue, Lerner says. "That was the only thing about the Pitney Bowes acquisition that made sense. I'm sure that it's not a business Business Objects wants to get involved in. They'll have to figure out what to do with that."
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