Time is money, and IBM (NYSE:IBM) is willing to pay plenty of money to Netezza (NYSE:NZ) shareholders to offer a faster data analytics solution to its customers. (For more stock analysis, see Best Dividend Stocks.)
Before Monday's open, IBM announced an agreement with Netezza where it would pay $27 a share in cash for the smaller technology company. While $27 a share is not a huge premium relative to Netezza's closing price on Friday, the stock had been on a tear since a strong earnings report in late August lifted the shares from a base in the low-to-mid teens. Paying an enterprise value to revenue multiple of almost seven, it is difficult to say that Netezza is selling itself cheaply.
What IBM is Getting
IBM has long since shed its "big iron" legacy and its middleware and data service business are a very significant part of its business. Within that, customers have increasingly turned to companies like IBM, Oracle (Nasdaq:ORCL) and Teradata (NYSE:TDC) to help them integrate their platforms and analyze large volumes of data in ever-shorter times. This is where Netezza comes in; Netezza boasts query speeds that are 10- to 100-times better than more traditional approaches, and its purpose-built data warehouse appliances have made it a strong competitor to the aforementioned Oracle, Teradata and its new owner, IBM.
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