IBM on Monday said it will acquire data warehouse appliance company Netezza in a deal valued at $1.7 billion.
With the move, IBM picks off one of Oracle's key competitors for its Exadata line. Oracle has frequently mentioned Netezza on earnings conference calls. Nevertheless, Netezza has been delivering solid growth and its recent quarter handily topped estimates.
The deal makes sense on many fronts. For starters, Netezza, which competes with larger players such as Teradata and now Oracle, could use a big brother. IBM can use Netezza to broaden its business analytics and data warehousing lineup and take out a competitor. IBM will pay $27 a share for Netezza, which closed Friday at $24.60.
IBM said the deal is expected to close in the fourth quarter. Netezza is one of the leaders in the data warehousing market and has enjoyed good success with its TwinFin product line (right).
Competitively we continue to see mainly Oracle, Teradata and IBM in our opportunities. Our win rates in Q2 were typical of what we have historically seen — of what we have seen historically, very high against our primary competitors and nearly 100% against the other entrants. We believe that this is due to our value proposition resonating well, the highest price performance available, appliance simplicity reducing total cost of ownership, and very fast time to value. This, coupled with our proven sales teams and business methodology, positions us very strongly against our competition.
The two companies are already partners. In a statement, IBM noted:
The existing relationship between IBM and Netezza reinforces the combined value to clients. Today, Netezza designs and develops its appliances on IBM systems technology and combined with IBM software powers many applications within organizations. The two companies have been strategic partners for many years focused on workload optimized systems that deliver integrated systems, software and storage for analyzing vast amounts of complex data.
Indeed, Netezza has 350 customers across a wide swath of industries.
The IBM purchase of Netezza, however, raises a few key questions.
- Will another bidder step in? When comparing relative value and market position of Netezza and 3Par it would stand to reason that the data warehousing provider could fetch a higher price.
- And the big question is what happens to Teradata. Teradata now finds itself playing in the land of giants---Oracle and IBM. Will Teradata become an acquisition target? Hewlett-Packard, which needs an answer for Exadata, would be a likely buyer.