Business intelligence vendor Cognos Inc. is paying SEK 390.8 million ($52.2 million) for Frango AB in a move designed to strengthen its position in the European corporate performance management market.
Stockholm, Sweden-based Frango, which has a 1,300-strong customer base, offers packages for consolidation, management reporting and the analysis of business information.
Though one of the pioneers of this sector of the market, and quoted on the Stockholm stock exchange, the 17 year-old company remains a modest-sized outfit and in 2003 reported net income of SEK 106,000 ($14,049) on revenue 1.5% higher at 256.4 million ($33.9 million).
Its performance can be judged from the fact that sales for each of its 230 employees amounts to $147,391 while, measured on the same basis, the 3,000 workforce of Cognos produce $227,705 each.
That indeed is the whole logic of the takeover as salespeople from the combined company can offer Frango’s customers a much broader suite of applications.
Though Cognos CEO, Rob Ashe, said that Frango had built a great product, and the acquisition would extend its ability to address key priorities, Cognos already has a consolidation product that stems from its acquisition of Adaytum in 2002. What the takeover gives it is a firm footing in the European market.
Though Frango recently opened an office in Taiwan, with a view to entering the market in China, it remains rooted in Europe, which produced 75% of its revenue last year. Sweden accounted for a further 16% and the rest of the world only produced nine percent.
Frango quotes an IDC estimate that the financial/BPM market was worth $338 million in 2003 and is likely to grow by 11% annually over coming years. It says its target group in Western Europe comprises around 12,000 companies and around 40% of those businesses have yet to invest in systems that support the consolidation of group accounts.
With Cognos currently in a quiet period ahead of publication of its second quarter figures, the company was unable to answer questions on the deal.