IBM's proposal to buy Canada's largest software company for $5 billion is being greeted with enthusiasm by some of its Ottawa-based executives and employees.
Robert Ashe, CEO of Cognos Inc., likes the proposed friendly takeover even though a month ago he said he wanted the publicly traded company to remain independent.
Cognos CEO Robert Ashe said IBM's offer was one his company couldn't refuse.
(CBC)
"For the return for our shareholders in terms of what they offered us, with the vision that they've expressed in terms of how we could do that, it was a proposal we couldn't turn down," he said Monday after the company announced that it had agreed to the deal.
He added that IBM wants to double the output at Cognos, a 40-year-old business software development company that employs 4,000 people around the world.
"That's going to take investment, not cost-cutting," Ashe said. "So I'm very confident that we're going to have a good solid team here in Ottawa and we're going to operate within the IBM context."
Some of the company's 1,600 employees in Ottawa also spoke optimistically of the deal as they lined up for a staff meeting Monday afternoon.
"I think it's a great move for the company," said one woman. "It's an acquisition of growth rather than trimming corners."
But Tyler Chamberlin, a professor at the University of Ottawa's School of Management, said the takeover was almost inevitable.
"It would have grown to be increasingly difficult for Cognos to stay on their own," he added, noting that the company is an outsider in a field where many bigger players do all their software development in-house.
While the deal will make the company stronger, he said, Ottawa will miss the regional leadership provided by one of the city's last homegrown independent tech companies, which held on to its independence through the takeovers of JDS, Corel and Newbridge.
"It is a change in terms of the voice of the region and who is going to speak on behalf of the tech sector," he said.
Speculation of a takeover of Cognos increased after its larger rival, Business Objects, agreed to be acquired by SAP, the German software giant, for nearly $7 billion US over Thanksgiving weekend.
In March, Oracle bought another Cognos competitor, Hyperion Solutions Corp., for $3.3 billion US.
Analysts had pegged IBM, Microsoft and Oracle as possible buyers of Cognos.
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