July 23, 2003 4:22 PM PDT

Hyperion joins merger merry-go-round

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Hyperion agreed Wednesday to purchase rival Brio Software for $142 million in cash and stock, the latest in a series of acquisitions sweeping through the business software industry.

Under the terms of the deal, Brio shareholders will receive just over a tenth of a share of Hyperion stock plus 36.3 cents for each share of their Brio stock. The boards of both companies have already approved the transaction, which is expected to be completed by the end of the year, the companies said.

Hyperion, based in Sunnyvale, Calif., and Brio, based in Santa Clara, Calif., both compete in the market for so-called "business intelligence software," which finds patterns and trends about companies by pulling information from their business systems. The companies booked $613 million in combined revenue over the past 12 months, they said. Together, they have 2,700 employees and 16,000 customers.

Hyperion said it plans to integrate Brio products with its own higher-end software. The addition of Brio should expand Hyperion's share of the market, the company said.

On Friday, Hyperion rival Business Objects announced the $820 million acquisition of Crystal Decisions in a similar move to absorb a competitor selling a lower-priced business intelligence product. Other contenders in the market include Cognos and SAS. Microsoft is also expected to join the action, with plans to add business-reporting features to its SQL database software.

The business software industry, suffering from two years of declining demand, appears to be suddenly struck with merger fever. PeopleSoft moved closer last week to closing its $1.8 billion acquisition of J.D. Edwards. Oracle continues to pursue an unfriendly $6.3 billion buyout of PeopleSoft. Best Software, a subsidiary of United Kingdom-based Sage Group, announced a $91.9 million merger with Timberline Software. Earlier this month, storage-systems maker EMC announced plans to purchase Legato Systems for $1.3 billion.

Despite a general slowdown in software spending, revenue for business intelligence software continues to grow. According to research firm Gartner Dataquest, information technology buyers will spend $2 billion on business intelligence in 2003 and are forecast to spend $2.3 billion by 2005.


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