Netezza: IBM analytics acqusition facing probe

22nd Sep 2010

A couple of US law firms have launched investigations into IBM’s proposed purchase of Netezza over claims that the analytics software vendor may have not obtained the best deal for shareholders.

IBM revealed that it had made a $27 per share, the equivalent of a $1.7 billion in cash, bid for Netezza on Monday US time in a move that would position it to compete directly with Oracle in the field of data warehousing appliances.

Steve Mills, senior vice president and group executive at IBM Software and Systems, said of the move: "IBM is bringing analytics to the masses. We continue to evolve our capabilities for systems integration, bringing together optimised hardware and software in response to increasing demand for technology that delivers true business value. Netezza is a perfect example of this approach."

The acquisition would enable IBM’s to provide customers with a broader set of analytics capabilities and bring the "power of analytics right into the hands of business users at every level of the organisation", Arvind Krishna, generation manager of IBM’s information management unit, added.

The aim is to house the Netezza data warehouse appliance in the information management software family. The deal is expected to close in the fourth quarter this year subject to Netezza shareholder and regulatory approval.

But two US law firms have launched probes on behalf of shareholders to investigate whether Netezza "properly shopped" the company prior to entering into its agreement with IBM.

Kendall Law Group, which specialises in complex securities litigation, said in a statement that there had been a "possible breach of fiduciary duty", which may have prevented Netezza from reaching a deal higher than the 9.8% premium over its closing share price on 17 September this year that would have provided "better value" to shareholders.

National shareholder litigation firm Ryan & Maniskas’s was also concerned over whether the company "undertook a fair process to obtain fair consideration for all shareholders", which may have led to violations of fiduciary and other laws, it claimed.

IBM has invested more than $12 billion in purchasing analytics offerings over the last four years and in the second fiscal quarter of this year, its analytics business grew by 14%.

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