Netezza Sold to IBM for $1.7B, Will Help Big Blue Tackle Big Data

The hits keep coming for IBM in Massachusetts—and this one is a biggie. The company (NYSE: IBM) announced this morning it plans to acquire Marlborough, MA-based Netezza (NYSE: NZ), the business analytics and data warehousing firm, for about $1.7 billion in cash. It will be Big Blue’s 18th acquisition of a company based in the Bay State (or with significant operations here) since 2003, and the largest since Cognos in 2008, which went for $4.9 billion. The news comes on the heels of IBM’s acquisition of Boston-area companies Unica last month and OpenPages last week.

Netezza makes hardware and software used by big companies like Amazon and Nieman Marcus to combine their storage, server, and database functions in one system. My colleague Wade first wrote about the firm in July 2007, when it had its initial public offering, which netted more than $100 million. Last year, Netezza got more competitive with its product pricing and offerings and started going after a broader customer base. Its big customers now include eHarmony, Time Warner, Estee Lauder, Blue Cross Blue Shield of Massachusetts, United HealthGroup, and Nationwide Insurance.

The deal fits with IBM’s recent trend of acquiring companies in business analytics to expand its offerings in the field significantly. It has spent more than $12 billion to buy 23 firms in this sector in the past four years, including Cognos, Guardium, and Unica in Massachusetts. Back in 2005, it also purchased data warehouse technology maker Ascential Software for $1.1 billion.

More broadly, the move fits IBM’s strategy of acquiring existing partners, which vice president of business development Mike Loria talked about with me recently. IBM has a long history of working with Netezza (and competing with it) to make products for analyzing huge amounts of complicated data and finding trends in the data. Loria also hinted at IBM’s plans to make acquisitions to further its “smarter planet” initiative, which involves things like making data centers, energy production, and transportation systems greener and more efficient.

Indeed, Netezza’s vision and approach “aligns very well with IBM’s Smarter Planet strategy,” said Jim Baum, president and CEO of Netezza, in a statement. “Together with IBM, we are looking forward to extending our capabilities to a much broader market.”

The acquisition is expected to close in the fourth quarter of this year, after which IBM says it will integrate Netezza within its Information Management software portfolio. Netezza has about 500 employees worldwide. It competes with companies like Oracle, Teradata, and, until today, IBM.

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