Business Objects plans to acquire privately held Crystal Decisions, a provider of enterprise reporting software that is claimed to be the fastest-growing vendor in the business intelligence (BI) market. The acquisition is valued at about $820 million.
According to a statement issued by Business Objects, Business Objects will issue approximately 26.5 million shares of common stock in respect of outstanding Crystal Decisions common shares and stock options, which will represent approximately 29 percent of the combined company`s shares. In addition, Crystal Decisions stockholders will receive an aggregate of $300 million in cash. Based on the closing price of Business Objects` stock on July 17, 2003 the transaction is valued at an aggregate purchase price of approximately $820 million.
The transaction is expected to be accretive to Business Objects` 2004 earnings even prior to considering the impact of expected revenue and cost synergies, but before purchase accounting adjustments. The companies expect to capitalize on significant growth opportunities resulting from complementary products, channels, and geographic presence. The companies also believe there are significant opportunities for operating cost synergies, which are expected to result in pre-tax savings of approximately $25 million for calendar year 2004.
"With this combination, we will seize the opportunity to take a leadership position in the BI market," said Bernard Liautaud, chairman and CEO of Business Objects. "The two companies are not only successful leaders in their space but have extremely complementary businesses, across many dimensions: Product capabilities, distribution channels, international coverage, and skillset. Together, we will become the clear choice for organizations looking to standardize on a single BI provider."
The transaction is expected to close in the fourth calendar quarter of 2003, and is expected to be tax free to shareholders of both companies with respect to the stock consideration the shareholders receive. The transaction is subject to regulatory reviews and approvals.
Earlier this year, Business Objects retooled its channel programme, cutting some partners and loosening up some sales requirements. It trimmed about 100 out of a total of more than 500 partners. Crystal Decisions, meanwhile, had looked at launching an initial public offering, filing registration with the Securities and Exchange Commission in May.
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