Business Objects' share price surged in Paris Thursday morning, as rumours swirled of a takeover bid.
Buying the French business intelligence (BI) software vendor could be a good way for IBM or Oracle to use the cash they have available, according to one analyst. All three companies declined to comment. And Business Objects spokesman Philippe Laguerre said: "We don't comment on rumours."
Oracle entered the BI market in March with the launch of three software bundles branded Oracle Business Intelligence Suite, combining its core database products, Fusion middleware and analytics software it acquired with its US$6 billion (£3.2bn) purchase of Siebel.
IBM already partners with BI vendor and Business Objects rival, Cognos. IBM also announced in March it will work more closely with Cognos to develop BI software with a service-oriented architecture (SOA). At the time, analysts suggested that acquiring Cognos would be a logical next step for IBM.
Such a move could be hastened if Oracle were to bid for Business Objects, said David Bradshaw, principal analyst for Ovum.
Bradshaw dismissed another rumour he had heard, that enterprise resource planning (ERP) vendor SAP could buy Business Objects. "They have not made many large acquisitions, and they already have their own BI technology," he said.
The BI market is dominated by a group of large, independent vendors. Business Objects expects revenue to total $1.2bn to $1.215bn this year. Cognos expects revenue of $950m to $970m in its current financial year, which ends next February. Of the other large BI vendors, only Teradata belongs to another company (NCR), Bradshaw said.
Based on Business Objects' market capitalization, a buyer would have to pay over €2bn ($2.5bn or £1.36bn) for the company, he said.
But should IBM and Oracle choose to change that status quo, buying Business Objects would be harder for Oracle than it looks, added Bradshaw.
"At first glance, it looks like a marriage made in heaven, but most of Oracle's customers already have at least one BI system," and often more, he said. Oracle applications have to work well with those different BI tools, and customers value that flexibility, he said. "Future customers would not want to be confined to having one BI tool."
Trading in Business Objects shares opened in Paris at €24.80 on Thursday, up from the Wednesday closing price of €23.02. As the rumours spread, the price peaked at €25 but by the close of trading had settled back to €24.76, up 7.6% on the previous day's close.